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WAEC Financial Accounting 1992 Question 37

Question 37

Bad Debts and Provisions

When provision is made for doubtful debt, the accounting entries are debit,

  1. A.Profit and Loss Account, credit Debtors Account
  2. B.Debtors Account, credit Trading Account
  3. C.Profit and Loss Account, credit Sales Account
  4. D.Profit and Loss Account, credit Provision for Doubtful Debt Account
  5. E.Trading Account, Credit Debtors Account
Show the answer and explanation

Answer: D (Profit and Loss Account, credit Provision for Doubtful Debt Account)

Explanation

The provision is charged to profit and loss and credited to the provision account; the debtors' accounts are not touched.