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Question

Bad debt amount should be credited to the _________ account.


A
Debtors 
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B
Bad debts 
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C
Sales 
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D
Creditors 
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Solution

The correct option is A Debtors 
Bad debts are the amount due from the debtors which are either declared as bad or doubtful. Bad debt is a loss to the organization and should be debited to profit & loss account as indirect expenses by reducing the amount of debtors.
Accounting entry to be passed on account of bad debt is as under:

Bad Debts A/c           Dr.
  To sundry Debtors

Accountancy

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