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Recovery of bad debts written off previously will be ?
- a)Credited to debtors A/c
- b)Adjusted against provision for doubtful debts
- c)Debited to debtors A/c
- d)Credited to Profit and Loss A/c
Correct answer is option 'D'. Can you explain this answer?
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Recovery of bad debts written off previously will be ?a)Credited to de...
Recovery of bad debts written off previously will be credited to Profit and Loss A/c. This means that when a bad debt is written off, it is treated as an expense and is charged to the Profit and Loss Account. However, if the debt is later recovered, it is considered as a revenue and is credited to the Profit and Loss Account.
The following are the reasons why bad debts written off previously are credited to the Profit and Loss Account:
1. Revenue: The recovery of bad debts is considered as revenue and is credited to the Profit and Loss Account.
2. Double Entry System: The double entry system requires that every transaction should have two aspects - a debit and a credit. When a bad debt is written off, it is debited to the Profit and Loss Account. When the debt is later recovered, it is credited to the Profit and Loss Account.
3. Matching Principle: The matching principle requires that expenses should be matched with revenues in the same accounting period. When a bad debt is written off, it is considered as an expense and is charged to the Profit and Loss Account. When the debt is later recovered, it is considered as revenue and is credited to the Profit and Loss Account.
In conclusion, the recovery of bad debts written off previously is credited to the Profit and Loss Account because it is considered as revenue, follows the double entry system, and is in line with the matching principle.
The following are the reasons why bad debts written off previously are credited to the Profit and Loss Account:
1. Revenue: The recovery of bad debts is considered as revenue and is credited to the Profit and Loss Account.
2. Double Entry System: The double entry system requires that every transaction should have two aspects - a debit and a credit. When a bad debt is written off, it is debited to the Profit and Loss Account. When the debt is later recovered, it is credited to the Profit and Loss Account.
3. Matching Principle: The matching principle requires that expenses should be matched with revenues in the same accounting period. When a bad debt is written off, it is considered as an expense and is charged to the Profit and Loss Account. When the debt is later recovered, it is considered as revenue and is credited to the Profit and Loss Account.
In conclusion, the recovery of bad debts written off previously is credited to the Profit and Loss Account because it is considered as revenue, follows the double entry system, and is in line with the matching principle.
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Recovery of bad debts written off previously will be ?a)Credited to de...
Bad debts writen off previous year in profit and loss account, DEBIT side considering that debt as a loss. But now I get this amount of bad debts so it's a profit for me as previous year profit decreases due to bad debts (loss)debit side entry in profit and loss account and partners share of profit reduces so bad debts recovery in this year is considered as profit and recorded in profit and loss account, now the partner share of profit increase this year. so previous year effect on profit get nullify.
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Recovery of bad debts written off previously will be ?a)Credited to debtors A/cb)Adjusted against provision for doubtful debtsc)Debited to debtors A/cd)Credited to Profit and Loss A/cCorrect answer is option 'D'. Can you explain this answer?
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