Question 15 of 22
Q.If there is no existing provision for doubtful debts, provision created for doubtful debts is ______.
(a) Credited to Bad debts account
(b) Debited to Bad debts account
(c) Debited to Profit and Loss account
(d) Debited to Sundry debtors account
Puducherry TnboardTamil Nadu HSC First Year (DGE) Commerce Board 2024MCQ· 1mImportance★★★★★
68% · 15/22 Questions
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Start your 14-day free trial to unlock the full solution →With no old provision, the whole provision for doubtful debts is debited to the Profit and Loss account.
A provision for doubtful debts is an estimated amount set aside for debtors who may fail to pay. Following the prudence (conservatism) concept, anticipated losses are provided for in advance.
When there is no existing (opening) provision, the entire provision created is treated as a fresh charge against the year's profit:
| Particulars | Debit | Credit |
|---|---|---|
| Profit and Loss A/c | Dr. | |
| To Provision for Doubtful Debts A/c | Cr. | |
| … |
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