The entry for creating a Provision for bad debts is_____________?

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The entry for creating a Provision for bad debts is_____________?

A. Debit Provision for Bad Debts A/c and credit Debtors A/c
B. Debit Debtors A/c and credit Provision for Bad Debts A/c
C. Debit Provision for Bad Debts A/c and credit Profit & Loss A/c
D. Debit Profit and Loss A/c and credit Provision for Bad Debts A/c.

Provision for bad debt is a charge against profit and therefore, the entry for creating
provision for bad debts is done by debiting P&L A/c and crediting provision for bad debts
account.

Bad debts recovered account will be transferred to______________?

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Bad debts recovered account will be transferred to______________?

A. Debtor‘s Account
B. Profit and Loss Account
C. Provision for Doubtful Debt Account
D. Either (b )or C. above

When Bad debts are recovered the entry is
Cash A/c …………………………………………………… Dr.
To Bad debts recovered A/c
This A/c can either be transferred to P& L A/c or Provisions for Doubtful Debts A/c.

Which of the following statements is correct about Depreciation?

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Which of the following statements is correct about Depreciation?

A. Depreciation cannot be provided in case of loss in a financial year
B. Depreciation is a charge against profit
C. Depreciation is provided in the books only when there is profit
D. Depreciation is an appropriation of profit

Depreciation is provided as a charge against profits. It is not an appropriation of profit. It
is provided irrespective of whether the business is making a loss or a profit. Hence statement B. is a
true statement.