PRC-1 · Chapter 5 · Question 47 of 100
If an entity successfully collects a debt that was written off in the PREVIOUS financial year, does this collection affect the current year's Gross Trade Receivables balance?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) No, it has no effect on Gross Receivables.
Explanation
Because the debt was written off previously, it is no longer part of the receivables ledger. The recovery simply debits Cash and credits Bad Debts Recovered (Profit or Loss), completely bypassing the receivables control account.
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