PRC-1 · Chapter 5 · Question 99 of 100
Journal entry to record a decrease in allowance during the year is:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Dr. Allowance for doubtful debts, Cr. Bad debt expense
Explanation
A decrease in the allowance requires debiting the Allowance for Doubtful Debts (to reduce the credit balance) and crediting Bad Debt Expense (or a separate income account).
More Bad and Doubtful Debts MCQs
- Q1Which fundamental accounting concept requires a business to create an allowance for doubtful debts even before an actual loss has occurred?
- Q2What is the specific nature of the 'Allowance for Doubtful Debts' account in the general ledger?
- Q3Which of the following scenarios best describes a situation where an account should be classified as a 'Bad Debt' rather than a 'Doubtful…
- Q4What is the correct double-entry journal record to write off a confirmed irrecoverable (bad) debt?
- Q5Which of the following statements regarding 'Good Debts' and 'Doubtful Debts' is completely correct?