Recording Provision for Doubtful debts

Q.

What is meant by provision for doubtful debts? How are the relevant accounts prepared and what journal entries are recorded in final accounts? How is the amount for provision for doubtful debts calculated?

Q.

Why is it necessary to create a provision for doubtful debts at the time of preparation of final accounts?

Q.

Which account is debited while creating a provision for doubtful debts in the books?

1. Debtors account

2. Bad debts account

3. Provision for doubtful debts account

4. Profit & loss account

Q. Give journal entry for:
For creating provision for doubtful debts.

1. Provision for doubtful debts A/c Dr.
   To Profit and Loss A/c
2. Profit and Loss A/c Dr.
   To Provision for doubtful debts A/c
3. Profit & Loss A/c Dr.
   To Bad debts A/c
4. Bad debts A/c Dr.
   To Sundry debtors A/c

Q.

What are the 'provisions'? How are they created? Give accounting treatment in case of provision for doubtful debts.

Q.

Which account is credited while creating a provision for doubtful debts in the books?

1. Provision for doubtful debts account

2. Debtors account

3. Bad debts account

4. Profit & loss account

Q.

Which of the following is the effect on net income, if a business creates a provision for doubtful debts?

1. No effect

2. It will increase net income

3. It will increase gross profit and net income

4. It will decrease net income

Q.

Is sole proprietorship a legal entity?

Q. What is meant by provision for doubtful debts? How are the relevant accounts prepared.and what journal entries are recorded in final accounts? How is the amount for provision for doubtful debts calculated?

Q. Question : What are 'provisions'? How are they created? Give accounting treatment in case of provision for doubtful debts.

Q. State whether Revaluation Account is debited or credited to record the increase in Provision for Doubtful Debts.

Q. C's Trial Balance contains the following information: Bad debts Rs. 4, 000, Provision for Doubtful debts Rs. 5, 000, Sundry debtors Rs. 25, 000. It is desired to create a provision for bad debts at 10% on sundry debtors at the end of the year. Sundry debtors will appear in the Balance Sheet at a figure of:

1. Rs. 21, 000
2. Rs. 15, 500
3. Rs. 18, 000
4. Rs. 22, 500

Q.

Will a promissory note stand up in court?

Q. Which preparing accounts from incomplete records, the amount of credit sales is determined by?

1. Preparing total creditors account.
2. Preparing total debtors account.
3. Ascertaining the balance in trading account other than closing stock.
4. Ascertaining the balance in debtors account and cash book.

Q. The adjustment entry for creating provision for doubtful debts is:

Profit or loss A/c Dr
To Provision for doubtful debts A/c

1. False
2. True

Q.

When you have a reasonable doubt that the debt is not fully/partly recoverable, then you make a _______

1. Bad debts recovered

2. Debtors ageing report

3. Provision for bad & doubtful debts

4. Provision for tax

Q. Provision for doubtful debts is _________________.

1. Debited to Sundry Debtors Account
2. Debited to Bad Debts Account
3. Debited to Profit & Loss Account
4. Credited to Sundry Debtors Account

Q. __________ are those debtors from where collection of money is not possible and amount given as a credit is certain loss.

1. Good Debts
2. Bad Debts
3. Doubtful Debts
4. None

Q. While creating provision for doubtful debts in the books of account, provision for doubtful debts account is:

1. Debited
2. Credited

Q.

ease explain the treatment of bad debts , new bad debts, provision for doubtful debts, bad debts written off in preparation of final accounts.

Q. Provision for bad and doubtful debts is shown as an income in the profit or loss account.

1. True
2. False

Q. Provision can be created for __________.

1. Current assets
2. Liabilities & assets
3. All of the above
4. Valuation adjustment for fixed asset

Q. Entry for bad debts is recorded in the ______.

1. Sales book
2. Purchase book
3. Cashbook
4. Journal proper

Q. Valuation balance sheet is prepared by _________.

1. Joint stock company
2. Banking company
3. General insurance company
4. Life insurance company

Q. The provision for bad debts is made by crediting __________.

1. Debtors account
2. Profit and loss account
3. Provision for bad debts account
4. Trading account