Irrecoverable debts and provision for irrecoverable debts

Alternative term for irrecoverable debts

• Bad debts

• depreciation

Alternative term for trade receivables

• creditor

• debtor

Purpose of preparing a statement of financial position is to

• monitor liquidity position of the business.

• measure the profitability of the business

Purpose of preparing a income statement is to

• monitor liquidity position of the business.

• measure the profitability of the business

Double entry for irrecoverable debts:

• Dr: Trade receivables and Cr: Irrecoverable debts

• Dr: Irrecoverable debts and Cr: Trade receivables

Irrecoverable debts will have an impact on :

• income

• expense

An increase in irrecoverable debts will ....

• increase expenses

• reduce expenses

An increase in irrecoverable debts will ....

• increase trade receivables

• reduce trade receivables

An increase in irrecoverable debts will ....

• increase expenses and reduce profit for the year

• reduce expense and increase profit for the year

An increase in irrecoverable debts will ....

• increase trade receivables and increase current assets

• reduce trade receivables and reduce current assets