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By Accounting Mcqs No Comments

At the time of preparation of financial accounts, bad debt recovered account will be transferred to?

A. Debtors A/c
B. Profit & Loss A/c
C. Profit & Loss Adjustment A/c
D. Profit & Loss Appropriation A/c

Bad debt recovered is a windfall gain and it is transferred to Profit & Loss Account at the time of preparation of Final Accounts. If provisions account is there in the books it will be transferred to Provision A/c and the balance if any in the provision account will be transferred to Profit & Loss Account. It is recovery of bad debt written off and hence it is not transferred to Debtors Account. It is not transferred to Profit & Loss Adjustment Account. It is not an appropriation to be transferred to Profit & Loss Appropriation Account. Thus, the answer is B

Related Mcqs:

  1. 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

  2. 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

  3. 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

  4. An increase in provision for bad debt will____________?

    A. Decrease net income
    B. Decrease liabilities
    C. Increase net income
    D. Increase liabilities

  5. Under the direct write-off method of recognizing a bad debt expense. Which of the following statements is/are true?

    A. The bad debt expense is not matched with the related sales
    B. Revenue is overstated in the year of sales
    C. It violates the matching principle of accounting
    D. All of the above

  6. Which of the following is not true with regard to preparation of Profit & Loss Account?

    A. Profit & Loss Account is prepared for a certain period and hence it is an interim statement
    B. Profit & Loss Account does not disclose the effect of non-financial items
    C. Net Profits are ascertained on the basis of current costs
    D. Net Profits as disclosed by P&L Account is not absolute

  7. The real accounts are accounts of Assets, liabilities and ___________?

    A. Expenses
    B. Revenues
    C. Capital
    D. Drawing

  8. A chart of accounts generally start with which of the following types of accounts?

    A. Assets accounts
    B. liability accounts
    C. Cash accounts
    D. Revenue accounts

  9. Which of the following accounts can be classified as a real account?

    A. Rent expenses account
    B. Rent income account
    C. insurance expenses account
    D. Cash account

  10. The balance of which of the following accounts do not disappear, once they are debited/credited to Trading Account?

    A. Sales
    B. Purchases
    C. Inward returns
    D. Closing stock

The correct answer to the question: "At the time of preparation of financial accounts, bad debt recovered account will be transferred to?" is "Profit & Loss A/c".

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