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why when preparing income statement some trade receivable needs to subtract irrecoverable debt first before multiply with allowance’s percentage?
some questions are directly multiply without having to subtract first?
It depends on the wording of the question.
If it says ‘irrecoverable debts were written of during the year’ then the receivables balance at the end of the year is already after subtracting them.
On the other hand, if you are given the receivables balance at the end of the year and told ‘it is then decided to write off some debts’ then they need removing from the balance given.
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