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Recording Bad Debts

A firm has no...

Question

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

A

Net profit will be overstated

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B

Net profit will be understated

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C

Gross profit will be overstated

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D

Gross profit will be understated

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Solution

The correct option is A
Net profit will be overstated

The net profit will be overstated due to this ommission.

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Similar questions

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

Q. Which of the following entry will be passed in the books of Consignor for recording bad debts if del-credere is allowed to Consignee?

A. Bad Debts A/c To Consignment Debtors A/c	Dr.
B. Bad Debts A/c To Profit & Loss A/c	Dr.
C. Bad Debts A/c To Consignee A/c	Dr.
D. No entry is required to be passed

Q. The Gross profit for the year ending

31.03.2009

1750

, Carriage inward is Rs.

150

bad Debts is Rs.

120

Proprietors personal expenses is Rs.

750

Carriage outward is Rs.

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. The amount of Net Profit will be:

Q. A's trial balance provides you the following information: Bad debts Rs.1,000. It is desired to maintain a provision for bad debts at Rs. 2,000. Amount debited to profit and loss a/c will be_________.

Q. Trial balance provides you the following information:
Debtors 80,000
Bad debts 2,000
Provision for bad debts 4,000
It is desired to maintain a provision for bad debt of 1,000. State the amount to be debited/credited in profit and loss account.

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