11 grd bookeeping mttest

What is bad debt?

• A debt that is expected to be collected in the future

• A debt that cannot be recovered from a debtor

• A debt that has been paid in advance

• A debt that is yet to be recorded

What is the purpose of making a provision for doubtful debts?

• To write off debts that have already been paid

• To increase the profit of the business

• To estimate potential losses from customers who may not pay

• To increase the amount of accounts receivable

If a business has accounts receivable of ₦200,000 and expects that 5% may not be collected, how much should be provided as doubtful debt?

• ₦5,000

• ₦10,000

• ₦20,000

• ₦50,000

Which account is debited when a bad debt is written off?

• Sales Account

• Cash Account

• Bad Debt Expense Account

• Debtor’s Account

What happens when a previously written-off bad debt is recovered?

• The amount is credited to the Bad Debt Recovered Account

• The amount is recorded as a new debt

• The amount is debited to the debtor’s account

• The amount is ignored in the books

How are bad debts recorded in the trial balance?

• As a credit item

• As a liability

• As an expense on the debit side

• As income on the credit side

If provision for doubtful debts is increased, what is the impact on net profit?

• It increases

• It remains unchanged

• It decreases

• It has no effect

If the provision for doubtful debts is reduced from ₦8,000 to ₦5,000, how should the adjustment be recorded?

• Debit Provision for Doubtful Debts, Credit Profit and Loss Account

• Debit Profit and Loss Account, Credit Provision for Doubtful Debts

• Debit Debtors’ Account, Credit Provision for Doubtful Debts

• Debit Bank Account, Credit Debtors’ Account

Which of the following statements is true?

• Bad debts are recorded in the cash book

• Provision for doubtful debts is deducted from total debtors in the balance sheet

• Bad debts increase the value of total assets

• Doubtful debts are written off immediately

What is the purpose of adjustments in the final accounts?

• To ignore outstanding transactions

• To ensure that all expenses and incomes relate to the current period

• To overstate profits for the business

• To avoid recording accruals