Use the table below to show whether each ratio has improved or deteriorated at the end of year 2, and give two reasons that could have led to the change. Return on capital employed (ROCE) has already been filled in as the example.
Prepare the provision for doubtful debts account in AY Limited’s ledger for the year ended 31 March 2025. Balance off the account and carry the balance down at 1 April 2025.
Explain the meaning of a ‘provision for doubtful debts’.
Name the accounting principle being used when a provision for doubtful debts is made.
Advise the directors of AY Limited whether delaying payments to their trade payables would or would not be a good way to secure the purchase of the equipment. Support your answer with arguments for and against delaying payments to trade payables.