Accounting Mcqs

Q.  The creation of provision for doubtful debts given as an adjustment requires____________?

a. Debit Profit and Loss Account and deduct the provision from debtors
b. Credit Profit & Loss Account and deduct the provision from debtors
c. Credit Profit and Loss Account and add the provision to debtors
d. Debit Profit & Loss Account and add the provision to debtors


ANSWER: See Answer
 
The adjustment for provision for bad debts account given in the adjustments is to debit P&L A/c and deduct from Sundry Debtors, the amount of provision for bad debts. Provision for bad debts is created against Sundry Debtors and therefore deducted from Sundry Debtors and Debited to P&L A/c as it is a charge against P&L A/c.
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