Multiple choice

The provision for bad debts should be made in the books of accounts on the basis of

  1. going concern concept

  2. convention of consistency

  3. Convention of coservatism

  4. Convention of materiality
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

According to this convention the business should 'anticipate no profits but provide for all possible losses'. Thus, the anticipated bad debts should be recorded in the books as provision.

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