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At the end of the financial year accounts receivable has a balance of Rs. 1,00,000 and Provision for the bad & doubtful debts provided amounting to Rs. 7,000. Net realizable value of the accounts receivable is :
- a)Rs. 7000
- b)Rs. 1,07,000
- c)Rs. 93,000
- d)Rs. 1,00,000
Correct answer is option 'C'. Can you explain this answer?
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At the end of the financial year accounts receivable has a balance of ...
As provision for Doubtful and bad depts are subtracted from debtors so 1,00,000-7,000 =93,000
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At the end of the financial year accounts receivable has a balance of ...
Debts has a balance of Rs. 10,000. This means that the company expects that Rs. 10,000 out of the Rs. 1,00,000 accounts receivable will not be collected. The provision for bad debts is set up to account for this expected loss.
The provision for bad debts is an estimated amount that a company sets aside to cover potential losses from customers who may not pay their outstanding debts. This is done in accordance with the accounting principle of conservatism, where companies take a cautious approach and anticipate losses rather than assuming all accounts receivable will be collected.
To calculate the provision for bad debts, a company may use various methods such as percentage of sales, percentage of accounts receivable, or specific identification of doubtful accounts. In this case, it is not specified which method was used to arrive at the Rs. 10,000 provision for bad debts.
Once the provision for bad debts is calculated, it is recorded as an expense in the income statement and as a contra-asset in the balance sheet. This reduces the accounts receivable balance and reflects the estimated loss in the financial statements.
It is important for companies to regularly review and adjust the provision for bad debts based on changes in customer payment behavior and other factors that may impact the collectability of accounts receivable. This ensures that the provision accurately reflects the potential losses and provides a realistic view of the company's financial position.
The provision for bad debts is an estimated amount that a company sets aside to cover potential losses from customers who may not pay their outstanding debts. This is done in accordance with the accounting principle of conservatism, where companies take a cautious approach and anticipate losses rather than assuming all accounts receivable will be collected.
To calculate the provision for bad debts, a company may use various methods such as percentage of sales, percentage of accounts receivable, or specific identification of doubtful accounts. In this case, it is not specified which method was used to arrive at the Rs. 10,000 provision for bad debts.
Once the provision for bad debts is calculated, it is recorded as an expense in the income statement and as a contra-asset in the balance sheet. This reduces the accounts receivable balance and reflects the estimated loss in the financial statements.
It is important for companies to regularly review and adjust the provision for bad debts based on changes in customer payment behavior and other factors that may impact the collectability of accounts receivable. This ensures that the provision accurately reflects the potential losses and provides a realistic view of the company's financial position.
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At the end of the financial year accounts receivable has a balance of Rs. 1,00,000 and Provision for the bad & doubtful debts provided amounting to Rs. 7,000. Net realizable value of the accounts receivable is :a)Rs. 7000b)Rs. 1,07,000c)Rs. 93,000d)Rs. 1,00,000Correct answer is option 'C'. Can you explain this answer?
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At the end of the financial year accounts receivable has a balance of Rs. 1,00,000 and Provision for the bad & doubtful debts provided amounting to Rs. 7,000. Net realizable value of the accounts receivable is :a)Rs. 7000b)Rs. 1,07,000c)Rs. 93,000d)Rs. 1,00,000Correct answer is option 'C'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about At the end of the financial year accounts receivable has a balance of Rs. 1,00,000 and Provision for the bad & doubtful debts provided amounting to Rs. 7,000. Net realizable value of the accounts receivable is :a)Rs. 7000b)Rs. 1,07,000c)Rs. 93,000d)Rs. 1,00,000Correct answer is option 'C'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for At the end of the financial year accounts receivable has a balance of Rs. 1,00,000 and Provision for the bad & doubtful debts provided amounting to Rs. 7,000. Net realizable value of the accounts receivable is :a)Rs. 7000b)Rs. 1,07,000c)Rs. 93,000d)Rs. 1,00,000Correct answer is option 'C'. Can you explain this answer?.
At the end of the financial year accounts receivable has a balance of Rs. 1,00,000 and Provision for the bad & doubtful debts provided amounting to Rs. 7,000. Net realizable value of the accounts receivable is :a)Rs. 7000b)Rs. 1,07,000c)Rs. 93,000d)Rs. 1,00,000Correct answer is option 'C'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about At the end of the financial year accounts receivable has a balance of Rs. 1,00,000 and Provision for the bad & doubtful debts provided amounting to Rs. 7,000. Net realizable value of the accounts receivable is :a)Rs. 7000b)Rs. 1,07,000c)Rs. 93,000d)Rs. 1,00,000Correct answer is option 'C'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for At the end of the financial year accounts receivable has a balance of Rs. 1,00,000 and Provision for the bad & doubtful debts provided amounting to Rs. 7,000. Net realizable value of the accounts receivable is :a)Rs. 7000b)Rs. 1,07,000c)Rs. 93,000d)Rs. 1,00,000Correct answer is option 'C'. Can you explain this answer?.
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