Accounting · Provisions and Reserves
With respect to accounting principles, which of the following statements regarding 'Provision for discount on debtors' is correct?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Provision for discount is created only on bad debtors.
- 2Provision for discount is created only on good debtors (total debtors minus provision for bad debts).✓
- 3Provision for discount is created on total gross trade receivables without any deductions.
- 4Provision for discount is created only on doubtful debtors.
Correct answer
Provision for discount is created only on good debtors (total debtors minus provision for bad debts).
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