PRC-1 · Chapter 5 · Question 10 of 100
At the end of the financial year, the 'Bad and Doubtful Debts Expense' account is formally closed by transferring its final balance to which financial statement?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) The Statement of Profit or Loss (Statement of Comprehensive Income)
Explanation
The Bad and Doubtful Debts Expense account is a nominal ledger account representing an operating cost. Like all expenses, it is closed out at year-end to the Statement of Profit or Loss.
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