Question

Provision for doubtful debts account is a ________.

• A. Personal Account
• B. Real Account
• C. Nominal Account
• D. None of these

Answer 1

The correct option is B Real Account

There are mainly three types of accounts in accounting: Real, Personal, and Nominal accounts. Personal accounts are classified into three subcategories: Artificial, Natural and Representative. All assets of a firm, which are tangible or intangible, fall under the category "Real Accounts".

Tangible real accounts are related to things that can be touched and felt physically, whereas, intangible real accounts are related to things that cab't be touched and felt physically.

The provision for bad debts might refer to the balance sheet account also known as the Allowance for Bad Debts, Allowance for Doubtful Accounts, or Allowance for Uncollectible Accounts. In this case, the account Provision for Bad Debts is a contra asset account (an asset account with a credit balance). Provision for doubtful debts account is a real account.