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WAEC Financial Accounting 2000 Question 38

Question 38

Bad Debts and Provisions

The double entry for increasing provision for bad debt is debit

  1. A.Debtor's Account, credit Provision for Bad Debt Account.
  2. B.Profit and Loss Account, credit Debtor's Account.
  3. C.Debtor's Account, credit Profit and Loss Account.
  4. D.Profit and Loss Account, credit Provision for Bad Debt Account.
Show the answer and explanation

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

Explanation

An increase in the provision is an expense (debit profit and loss) and raises the provision (credit).