Q193
Which of the following is the most common cause of bad debt?
A.
Debtor refusal to repayment
B.
Debtor left the country
C.
Debtor committed a crime
D.
Debtor declared to be a bankrupt
AnswerAnswer: Option D
Solution
Answer: Option D
Solution:
Debtor declared to be a bankrupt is the most common cause of bad debt. A bad debt is a monetary amount owed to a creditor that is unlikely to be paid and, or which the creditor is not willing to take action to collect for various reasons, often due to the debtor not having the money to pay, for example due to a company going into liquidation or insolvency.