Q195
Which of the following is a commonly used base to create the provision for doubtful debts?
A.
Total purchases
B.
Total credit sales
AnswerC.
Total current assets
D.
Total current liabilities
Answer: Option B
Solution
Answer: Option B
Solution:
Total credit sales is a commonly used base to create the provision for doubtful debts. The provision for doubtful debts is the estimated amount of bad debt that will arise from accounts receivable that have been issued but not yet collected. It is identical to the allowance for doubtful accounts.