PRC-1 · Chapter 5 · Question 63 of 100
An 'Aging Analysis' schedules outstanding receivables into time brackets (e.g., 30 days, 60 days, 90+ days). Which bracket typically requires the highest percentage of allowance for doubtful debts?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) Over 90 days old Receivables
Explanation
Statistically, the longer an invoice remains unpaid past its due date, the higher the probability that it will become a bad debt. Therefore, the oldest bracket receives the highest allowance percentage.
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