A decrease in provision for doubtful accounts relative to gross accounts receivable could indicate improved collection of accounts receivable or it could indicate that management has failed to make adequate provisions for non-collectible accounts.

Question

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A decrease in provision for doubtful accounts relative to gross accounts receivable can indicate both improved collection of accounts receivable or inadequate provisions for non-collectible accounts. Therefore, the statement is true.

A Decrease in Provision for Doubtful Accounts Relative to Gross