Recording Bad Debts

Q.

What is the correct entry passed to close bad debts recovered account?

1. Profit or loss A/c Debit

2. Bad debts recovered A/c Debit

3. None of these

4. Cash A/c Debit

Q.

How is the amount of credit sale ascertained from incomplete records?

Q.

What is the effect of sales return?

Q.

When it is certain that a debt won’t be recovered, which of the following is correct?

1. Provision for bad debt is credited

2. Accounts receivable is credited

3. Bad debts are credited

4. Sales are debited

Q.

Which account is debited while recording the entry of bad debts of Mr. Ram amounting to Rs 10, 000 given in adjustments?

1. Ram`s account

2. Bad debts account

3. Profit & loss account

4. None of the above

Q. The entry for creating a provision for bad debts is:

1. Debit provision for bad debts a/c and Credit debtors a/c.
2. Debit provision for bad debts a/c and Credit [profit and loss a/c.
3. Debit debtors a/c and Credit provision for bad debts a/c.
4. Debit profit and loss a/c and Credit provision for bad debts a/c.

Q. The entry for creating a provision for bad debts is ___________.

1. debit provision for bad debts a/c and credit debtors a/c
2. debit profit and loss a/c and credit provision for bad debts a/c
3. debit debtors a/c and credit provision for bad debts a/c
4. debit provision for bad debts a/c and credit profit and loss a/c

Q.

Which account is credited while recording the entry of bad debts of Mr. Ram amounting to Rs 10, 000 given in adjustments?

1. Ram`s account

2. Bad debts account

3. Profit & loss account

4. None of the above

Q. Bad Debts recovered is an example of __________.

1. Decrease in Liability & Increase in Owner's Liability
2. Increase in Liability & Decrease in Owner's Liability
3. Increase in Asset & Owner's Liability
4. Increase in Liability & Owner's Liability
5. Decrease in Asset & Owner's Liability

Q. account is debited while recording the entry for bad debts of Mr. Ram amounting to Rs.10, 000.

1. Ram
2. Debtors
3. Bad debts
4. Profit or loss

Q. Give journal entry for:

1. Profit & Loss A/c Dr.
   To Bad debts A/c
2. Profit and Loss A/c Dr.
   To Provision for doubtful debts A/c
3. Bad debts A/c Dr.
   To Sundry debtors A/c
4. None of the above

Q.

A firm has not recorded the bad debts by mistake. Which of the following is the effect of bad debts omission?

1. Net profit will be overstated

2. Gross profit will be overstated

3. Gross profit will be understated

4. Net profit will be understated

Q.

The term ______ usually refers to accounts receivable that will not be collected.

1. Debtors

2. Bad debts

3. Provision for bad debts

4. None of the above

Q. Select the most appropriate alternatives from those given below :

Cash column of cash book can never have ________ balance.
a) credit
b) debit
c) zero
d) none of the above

Q. Give journal entry for:
Bad debts written off.

1. Profit & Loss A/c Dr.
   To Provision for doubtful debts A/c
2. Bad debts A/c Dr.
   To Profit & loss A/c
3. Profit & loss A/c Dr.
   To Sundry debtors A/c
4. None of the above

Q. Many times we read in newspapers that some bank(s) has/have to write off a certain amount given/advanced by them. In banking terminology, what does 'write off' mean?

1. Loans for which documentation work is yet to be completed
2. Loans sanctioned on paper but bank has yet to make provision for the same so that borrower can withdraw the money
3. Big corporate loans for which bank has/have to take approval from RBI.
4. Those loans which can never become bad or uncollectable loans as they are given under some social assistance scheme by the Govt of India

Q. usually refers to accounts receivable that will not be collected.

1. Debtors
2. Bad debts
3. Provision for debts
4. Discount

Q. Sinking funds is created for

1. Specific purpose
2. General purpose
3. Both
4. Either (a) or (b)

Q. At the time of preparation of financial accounts, bad debts recovered account will be transferred to______________.

1. Debtors A/c
2. Profit and Loss A/c
3. Profit and Loss Adjustment A/c
4. Profit and Loss Appropriation A/c

Q. The debts written off as bad, if recovered subsequently, are ___________________.

1. Credited to Bad Debts Recovered Account
2. Credited to Debtors Account
3. Debited to Profit and Loss Account
4. None of these