PRC-1 · Chapter 5 · Question 5 of 100
Which of the following statements regarding 'Good Debts' and 'Doubtful Debts' is completely correct?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Good debts do not require any special accounting treatment or allowance, unlike bad and doubtful debts.
Explanation
Good debts are those that the business fully expects to collect without difficulty. They remain in the receivables balance and do not require any specific allowance or write-off.
More Bad and Doubtful Debts MCQs
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- Q11What is the specific computational difference between a 'Specific Allowance' and a 'General Allowance' for doubtful debts?