Blue Shoes Ltd has gone bankrupt and will not pay S10 000 to XYZ. XYZ has accounts receivable of $12 million and an allowance for doubtful debts of $500 000. XYZ does not adjust its accounts for the $10 000 that will not be paid by Blue Shoes Ltd. Which of the following remarks is true about the financial statements? O A. There is no effect on total liabilities, assets or net profit. O B. There is an overstatement of total assets and net profit. There is an understatement of total assets and net profit. O D. There is an understatement of net profit. O O

Blue Shoes Ltd has gone bankrupt and will not pay S10 000 to XYZ. XYZ has accounts receivable of $12 million and an allowance for doubtful debts of $500 000. XYZ does not adjust its accounts for the $10 000 that will not be paid by Blue Shoes Ltd. Which of the following remarks is true about the financial statements? O A. There is no effect on total liabilities, assets or net profit. O B. There is an overstatement of total assets and net profit. There is an understatement of total assets and net profit. O D. There is an understatement of net profit. O O

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter6: Losses And Loss Limitations

Section: Chapter Questions

Problem 1BD

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