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JAMB Principles of Accounts 2003 Question 17

Question 17

Bad Debts and Provisions

Provision for discount allowed can be recorded as a debit to

  1. A.the profit and loss account and a credit to provision for discount allowed
  2. B.provision for discount allowed and a credit to the profit and loss account
  3. C.discount allowed and a credit to the profit and loss account
  4. D.expenses and a credit to customers' account
Show the answer and explanation

Answer: A (the profit and loss account and a credit to provision for discount allowed)

Explanation

Creating the provision is an expense: debit profit and loss, credit provision for discount allowed.