7707 MJ Provision for doubtful debt

Quiz
•
Other
•
12th Grade
•
Hard
Mariam Rehman
FREE Resource
15 questions
Show all answers
1.
MULTIPLE CHOICE QUESTION
1 min • 1 pt
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?
A
B
C
D
2.
MULTIPLE CHOICE QUESTION
1 min • 1 pt
Why does a business maintain a provision for doubtful debts account?
to apply the accounting principle of prudence
to avoid profit for the year being understated
to have an accurate forecast of debts which will be uncollectible
to reduce the expense of irrecoverable debts in the future
3.
MULTIPLE CHOICE QUESTION
1 min • 1 pt
On 1 April 2020 Ahmed had a provision for doubtful debts of $290. The following journal entry was made on 31 March 2021.
What was the provision for doubtful debts deducted from trade receivables in Ahmed’s statement of financial position on 31 March 2021?
$25
$265
$290
$315
4.
MULTIPLE CHOICE QUESTION
1 min • 1 pt
Shilpa’s financial year ends on 30 April. On 31 March 2021 she wrote off a debt owed by Tahir as irrecoverable.
Which entry did Shilpa make on 31 March 2021?
A
B
C
D
5.
MULTIPLE CHOICE QUESTION
1 min • 1 pt
Nula’s financial year ends on 31 December. She maintains a provision for doubtful debts of 5% of trade receivables.
On 1 January 2021, the provision amounted to $800. On 31 December 2021,
trade receivables owed $13 400, of which $600 was regarded as irrecoverable.
How much was the provision for doubtful debts on 1 January 2022?
$600
$640
$660
$670
6.
MULTIPLE CHOICE QUESTION
1 min • 1 pt
Which statement about a debts recovered account is correct?
The account is used when an amount, previously written off, is received from a customer.
The account is used when doubtful debts are recovered.
The balance of the account is debited to the income statement at the end of the year.
The balance of the account is shown in the statement of financial position.
7.
MULTIPLE CHOICE QUESTION
1 min • 1 pt
At the end of the financial year, Karim decided to increase his provision for doubtful debts.
How will this affect his income statement and the statement of financial position?
A
B
C
D
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