Which of the following statements related to the balance sheet account Allowance for Doubtful Debts are correct? Select as many as you think are true.

Select one or more:

1.The balance day adjustment records the write off of actual bad debts.

2.The tax treatment of accounts receivable is similar to the direct write off method where no allowance account is recognised.

3.Represents a tax liability in the future.

4.Tax deductions are only allowed when bad debts are written off.

5.The current tax liability will be reduced if the allowance for doubtful debts account increases over the accounting period.

The current tax liability will be reduced if the allowance for doubtful debts account decreases over the accounting period.

The balance day adjustment records the increase in the allowance account due to uncertainty about collection from customers.

Tax deductions are allowed whenever the allowance for doubtful debts is increased.

Represents a tax asset in the future.

The tax base equals the carrying amount of accounts receivable after deducting the allowance for doubtful debts.