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JAMB Principles of Accounts 2002 Question 1

Question 1

Bad Debts and Provisions

In preparing the final accounts, the bad debt account is closed by a transfer to the

  1. A.balance sheet
  2. B.provision for bad debt account
  3. C.profit and loss account
  4. D.trading account.
Show the answer and explanation

Answer: C (profit and loss account)

Explanation

Bad debts are an expense, so the bad debts account is closed off to the profit and loss account.