PRC-1 · Chapter 5 · Question 36 of 100
A business has a 'Bad and Doubtful Debts Expense' ledger account. During the year, Rs. 5,000 of bad debts were debited to it. At year-end, the allowance for doubtful debts was decreased by Rs. 2,000 (credited to this expense account). What is the final transfer to Profit or Loss?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Debit Profit or Loss Rs. 3,000
Explanation
The expense account has a debit of 5,000 and a credit of 2,000, leaving a net debit balance of 3,000. This net expense is transferred by debiting Profit or Loss and crediting the expense account.
More Bad and Doubtful Debts MCQs
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- Q41Which of the following describes the core distinction between 'Bad Debts' and 'Allowance for Doubtful Debts'?
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