Bar Practice Test & Exam Prep | Pakistan

Provision for expected credit losses on advances primarily affects which financial statement elements?

Increases assets and increases equity only Increases cash and increases customer deposits Increases share capital and reduces contingencies Increases an expense (or impairment charge) and reduces the carrying amount of loans (via allowance)

Correct Answer:

Increases an expense (or impairment charge) and reduces the carrying amount of loans (via allowance)

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