Irrecoverable debts and provision for doubtful debts

What is irrecoverable debts?

• estimate of the loss in value of non-current assets over its expected working life

• estimate of the amount which a business will lose in a financial year

• amount owing to a business which will not be paid by the credit customer

• a copy of a customer's account in the book of bank.

which is the application for provision for doubtful debts?

• Principle of consistency

• principle of prudence

• principle of realisation

• principle of duality

which entry for provision of doubtful debt appeared in the income statement for the year ended 31 march 2016?

• $160 as an expenses

• $160 as an income

• $240 as an expense

• $240 as an income

Antony decided to write off $300 owed by Mariam. He debited Mariam's account and credited the provision for doubtful debts account, both with $300.

which entries are needed to correct the error?

• Debit: Bad debts, $300

  Credit: Mariam, $300

• Debit: Bad debts, $300 & Provision for doubtful debts, $300

  Credit: Mariam $600

• Debit: Provision for doubtful debts, $300

  Credit: Bad debts, $300

• Debit: Provision for doubtful debts, $600

  Credit: Bad debts,$300 & Mariam, $300

Hiro wishes to increase his provision for doubtful debts at the end of the year.

How does he record this increase?

• Debits: bad debts

  Credit: Provision for doubtful debts

• Debit: Provision for doubtful debts

  Credit: bad debts

• Debit: income statement

  Credit: Provision for doubtful debts

• Debit: Provision for doubtful debts

  Credit: Income statement

On 31 March 2018 Sasha had trade receivables of $95000. She wrote off a bad debt, $750, and made a provision for doubtful debts of 2% of trade receivable.

What was the figure for net trade receivable in the statement of financial position at 31 March 2018?

• $92350

• $92365

• $93115

• $94250

Joseph sells goods on credit and maintains a provision for doubtful debts. He wants to increase his provision for doubtful debts by 250.

Which journal entry records an increase in the provision for doubtful debts?

• Debit: Credit customer, $250

  Credit: Income statement, $ 250

• Debit: Income statement, $250

  Credit: Credit customer, $ 250

• Debit: Income statement, $250

  Credit: Provision for doubtful debts, $ 250

• Debit: Provision for doubtful debts, $250

  Credit: Income statement, $ 250

Irrecoverable debts also known as

• Bad debts

• debts received

• debt written off

Zadar owed Ali $500. Zafar was only able to pay Ali $200. Ali wrote the balance off as a bad debt.

Which entries record this in Ali's ledger?

• Debit: Bad debts, $500

  Credit: bank, $200 & Zafar, $300

• Debit: bank, $200 & Zafar, $300

  Credit: Bad debts, $500

• Debit: bank, $200 & bad debts, $300

  Credit: Zafar, $500

• Debit: Zafar, $500

  Credit: Bad debts, $300 & bank, $200

A trader sold goods to Zahid on credit. Zahid failed to pay the amount owing and was written off as a bad debt.

What entries will the trader make to write off this bad debt?

• Debit: bad debts

  Credit: sales

• Debit: bad debts

  Credit: Zahid

• Debit: sales

  Credit: bad debts

• Debit: Zahid

  Credit: bad debts