PRC-1 · Chapter 5 · Question 45 of 100
Which of the following is true regarding the presentation of the 'Allowance for Doubtful Debts' in the Statement of Financial Position?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) It is deducted from Gross Trade Receivables to show Net Trade Receivables.
Explanation
As a contra-asset, the allowance is shown as a deduction from the related asset (Gross Trade Receivables) in the Current Assets section.
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