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Standard XI

Accountancy

Trading & Profit or Loss Account

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?

gross profit will be understated

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Net profit would be understated

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Net profit would be overstated

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Gross profit would be overstated

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Solution

The correct option is C
Net profit would be overstated

Net profit would be overstated in case of omission of recording for bad debt.

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Similar questions

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

is Rs.

1750

, Carriage inward is Rs.

150

bad Debts is Rs.

120

Proprietors personal expenses is Rs.

750

Carriage outward is Rs.

175

. The amount of Net Profit 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.

The following information is extracted from the Trial Balance of M/s Nisha Traders on 31 March 2017.

Sundry Debtors	80,500
Bad Debts	1,000
Provision for Bad Debts	5,000

Additional Information

Bad Debts Rs 500

Provision is to be maintained at 2% of Debtors

Prepare bad debts account, Provision for bad debts account and profit and loss account.

The following balances appeared in the trial balance of M/s Kapil Traders as March 31, 2012.

Sundry debtors 30,500

Bad debts 500

Provision for bad debts 2,000

The partners of the firm agreed to records the following adjustments

in the books of the Firm. Further bad debts Rs 300. Maintain

provision for bad debts 10 $%$ . Show the following adjustments in

the bad debts account, provision account, debtors account, profit

and loss account and balance sheet.

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

The correct option is C Net profit would be overstated Net profit would be overstated in case of omission of recording for bad debt.

The correct option is C
Net profit would be overstated

Net profit would be overstated in case of omission of recording for bad debt.