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By Accounting Mcqs No Comments

The creation of provision for doubtful debts given as an adjustment requires____________?

A. Debit Profit and Loss Account and deduct the provision from debtors
B. Credit Profit & Loss Account and deduct the provision from debtors
C. Credit Profit and Loss Account and add the provision to debtors
D. Debit Profit & Loss Account and add the provision to debtors

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The adjustment for provision for bad debts account given in the adjustments is to debit P&L A/c and deduct from Sundry Debtors, the amount of provision for bad debts. Provision for bad debts is created against Sundry Debtors and therefore deducted from Sundry Debtors and Debited to P&L A/c as it is a charge against P&L A/c.

Related Mcqs:

  1. If actual bad debts are more than the provision for bad debts, then there will be a_____________?

    A. Credit balance of Provision for Bad Debts Account
    B. Debit balance of Provision for Bad Debts Account
    C. Debit balance of Bad Debts Account
    D. Debit balance of Discount on Debtors Account

  2. 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.

  3. A discount of $2000 was given to a supplier on his prompt repayment of debt but the cashier entered the gross amount in cash book. What should be the adjustment in cash to work out the correct balance of cash book?

    A. $2000 will be debited in cash book
    B. $2000 will be credited in cash book
    C. $4000 will be debited in cash book
    D. $4000 will be credited in the cash book

  4. Debts which are payable in the course of a month are called _____________?

    A. External liabilities
    B. Fixed liabilities
    C. Current liabilities
    D. Liquid Liabilities

  5. 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

  6. Bad debts recovered is:

    A. Credited to P&L A/c
    B. Debited to P&L A/c
    C. Reduced from debtors in Balance Sheet
    D. Added to debtors in Balance Sheet

  7. The adjustment to be made for income received in advance is:

    A. Add income received in advance to respective income and show it as a liability
    B. Deduct income received in advance from respective income and show it as a liability
    C. Add income received in advance to respective income and show it as asset
    D. Deduct income received in advance from respective income and show it as an asset in the Balance Sheet

  8. Goods in stock worth 800 are destroyed by fire and the Insurance Co. is accepted the claim for 600. Adjustment would involve

    A. Debit of 800 to Trading Account and credit of 600 and 200 to insurance company and
    Profit and Loss Account respectively
    B. Deduct the 800 from closing stock in the Trading Account
    C. Credit insurance company for 600
    D. Debit of 600 and 200 to insurance company and Profit and Loss Account respectively and
    credit of 800 to Trading Account

  9. A company was entered in hire purchase agreement and had to pay $1000 per month. Three payments were made via bank account but no entry was found in cash book. Identify the correct adjustment in cash book

    A. $1000 will be added to cash book balance
    B. $2000 will be deducted from cash book balance
    C. $3000 will be added to cash book balance
    D. $3000 will be subtracted from cash book balance

  10. $5000 deposited in bank account was entered twice in the cash book. Identify the correct adjustment in cash book.

    A. $5000 will be credited
    B. $5000 will be debited
    C. $10,000 will be credited
    D. $10,000 will be debited

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The correct answer to the question: "The creation of provision for doubtful debts given as an adjustment requires____________?" is "Debit Profit and Loss Account and deduct the provision from debtors".

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