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WAEC Financial Accounting 1995 Question 6

Question 6

Bad Debts and Provisions

The accounting entries required for increase in provision for doubtful debts are

  1. A.debit Profit and Loss Account, credit Provision for Doubtful Debts account
  2. B.credit Provision for Doubtful Debts Account, debit Profit and Loss Account
  3. C.debit Trading Account, credit Provision for Doubtful Debts Account
  4. D.credit Trading Account, debit Provision for Doubtful Debts Account.
  5. E.credit Debtor's Account, debit Provision for Doubtful Debts Account.
Show the answer and explanation

Answer: A (debit Profit and Loss Account, credit Provision for Doubtful Debts account)

Explanation

An increase is an expense: debit profit and loss, credit the provision account.