A business has trade receivables of Rs. 100,000 and estimates an allowance for doubtful debts of Rs. 6,000. What amount of receivables is normally shown in the statement of financial position?
Correct answer: A. Rs. 94,000
- A. Rs. 94,000
- B. Rs. 100,000
- C. Rs. 106,000
- D. Rs. 6,000
Explanation
Trade receivables are presented net of the expected credit loss allowance. Thus, Rs. 100,000 less Rs. 6,000 gives a carrying amount of Rs. 94,000. The allowance is not added to receivables.
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About Financial Statements
Financial statements present a business's financial performance and position through the income statement, statement of financial position, cash flow statement and changes in equity. Questions involve preparing and interpreting these statements, adjusting entries, depreciation, closing inventory, accrued and prepaid items, and distinguishing profit from cash flow.
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