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UI Post-UTME Financial Accounting 2024 (Model questions) Question 1

Question 1

Bad Debts and Provisions

The bad debt account is closed by transferring the balance to

  1. A.credit of capital account
  2. B.debit of profit and loss
  3. C.debit of the debtors personal account
  4. D.credit of profit and loss account
Show the answer and explanation

Answer: B (debit of profit and loss)

Explanation

Bad debts are a loss, so at year end they are transferred to the debit of the profit and loss account.