- 1 Marks
Question
A decrease in provision for doubtful debts is ……………………. to the income statement and ……………………….. to the provision for doubtful debt account.
Answer
Credit; debit
Explanation:
A decrease in the provision for doubtful debts increases the profits, so it is credited to the income statement. Simultaneously, the decrease is debited to the provision for doubtful debts account, reducing the liability. Therefore, the correct answer is “Credit; debit.”
- Tags: Bad Debts, Income Statement, Provision for Doubtful Debts
- Level: Level 1
- Topic: Bad and Doubtful Debts
- Series: MAY 2012
- Uploader: Theophilus