PRC-1 · Chapter 5 · Question 76 of 100
Which of the following actions directly REDUCES the total of 'Current Assets' in the Statement of Financial Position?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) An increase in the Allowance for Doubtful Debts.
Explanation
Because the allowance is a contra-asset deducted from gross receivables, increasing the allowance directly reduces the Net Trade Receivables, thereby reducing total Current Assets.
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