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Provision for doubtful debts will appear under:
  • a)
    Long – term Provisions
  • b)
    Short – term Provisions
  • c)
    Reserves and Surplus
  • d)
    Other Current Assets
Correct answer is option 'B'. Can you explain this answer?
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Provision for doubtful debts will appear under:a)Long – term Pro...
While preparing companies balance sheet trade receivables are shown without deducting the provision for doubtful debts and it is shown in the liabilities side under short term provisions.
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Provision for doubtful debts will appear under:a)Long – term Pro...
The answer will be b. As short term provisions are the amount set aside for meeting future liability for a particular year and provision for bad and doubtful debts are short term provisions as these are made on the basis past experiences each year. The estimated value is set aside as an expense which appears either on asset side under debtors heading (detucted from debtors) or comes directly on the liability side.
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Provision for doubtful debts will appear under:a)Long – term Pro...
It is short-term provision as it is for the doubtful bad debts, and debtors can become bad debt anytime in the future year, so it is used to fulfill the short term liabilities
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Read the following hypothetical Case Study and answer the given questions:The business which follows the convention of prudence keeps provisions and reserves so that they can keep the liquidity of the firm and help it in the time of crisis. But, what are exactly Reserves and Provisions. When we talk about provisions, they mean setting aside a part of the profits for meeting a known future liability, the amount of which is not accurately known at the time of finalization of financial statements. It is made for meeting known future liability. The amount of the liability cannot be determined accurately. It is charge against profit reducing the profit. Provisions serve a lot of purposes. It helps in ascertaining the true net profit of the entity. The true financial position can be determined adequately. It helps in providing funds for the liabilities that may occur in future. It helps in the proper allocation of expenses that are incurred over the time.Reserves, on the other hand, means an appropriation of profits or other surplus to strengthen the liquid resources of the business enterprise and not for meeting any liability, contingency or any commitment of the business. They are retained or undistributed net profit. It is voluntarily done to strengthen the financial position of the firm. It can be used for investing in outside securities. Like provisions, reserves are also very important for the business enterprises. It helps in meeting any unforeseen expenses. It strengthens the financial position of the firm. It helps in equal distribution of profit. It helps in providing funds to meet liability____________ means setting aside a part of the profits for meeting a known future liability.

Read the following hypothetical Case Study and answer the given questions:The business which follows the convention of prudence keeps provisions and reserves so that they can keep the liquidity of the firm and help it in the time of crisis. But, what are exactly Reserves and Provisions. When we talk about provisions, they mean setting aside a part of the profits for meeting a known future liability, the amount of which is not accurately known at the time of finalization of financial statements. It is made for meeting known future liability. The amount of the liability cannot be determined accurately. It is charge against profit reducing the profit. Provisions serve a lot of purposes. It helps in ascertaining the true net profit of the entity. The true financial position can be determined adequately. It helps in providing funds for the liabilities that may occur in future. It helps in the proper allocation of expenses that are incurred over the time.Reserves, on the other hand, means an appropriation of profits or other surplus to strengthen the liquid resources of the business enterprise and not for meeting any liability, contingency or any commitment of the business. They are retained or undistributed net profit. It is voluntarily done to strengthen the financial position of the firm. It can be used for investing in outside securities. Like provisions, reserves are also very important for the business enterprises. It helps in meeting any unforeseen expenses. It strengthens the financial position of the firm. It helps in equal distribution of profit. It helps in providing funds to meet liability____________ means an appropriation of profits or other surplus to strengthen the liquid resources of the business enterprise.

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Provision for doubtful debts will appear under:a)Long – term Provisionsb)Short – term Provisionsc)Reserves and Surplusd)Other Current AssetsCorrect answer is option 'B'. Can you explain this answer?
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