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Effect of Dishonored Bill of Exchange on Revaluation Account and Balance Sheet and in case if debtors are given 30,000 and provision for doubtful debts 5% to be created against debtors.?
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Effect of Dishonored Bill of Exchange on Revaluation Account and Balan...
Effect of Dishonored Bill of Exchange on Revaluation Account and Balance Sheet
- When a bill of exchange is dishonored, it implies that the debtor has failed to make the payment as promised.
- The dishonor of a bill of exchange will result in a loss for the business, which needs to be accounted for in the books.
Revaluation Account
- The loss incurred due to the dishonored bill of exchange will be recorded in the revaluation account under the debit side.
- This loss will reduce the overall value of the business as it represents a financial setback.
Balance Sheet
- The balance sheet will reflect the impact of the dishonored bill of exchange by showing a decrease in the total assets of the business.
- The loss will also affect the overall profitability of the business, which will be reflected in the balance sheet.
Provision for Doubtful Debts
- Given that debtors are given 30,000, a provision for doubtful debts of 5% needs to be created against the debtors.
- This provision is necessary to account for the possibility that some debtors may default on their payments.
- By creating this provision, the business is ensuring that it has set aside funds to cover potential losses from bad debts.
In conclusion, the dishonor of a bill of exchange will have a negative impact on the business's revaluation account and balance sheet. It is important to create provisions for doubtful debts to account for potential losses from debtors who may default on their payments.
- When a bill of exchange is dishonored, it implies that the debtor has failed to make the payment as promised.
- The dishonor of a bill of exchange will result in a loss for the business, which needs to be accounted for in the books.
Revaluation Account
- The loss incurred due to the dishonored bill of exchange will be recorded in the revaluation account under the debit side.
- This loss will reduce the overall value of the business as it represents a financial setback.
Balance Sheet
- The balance sheet will reflect the impact of the dishonored bill of exchange by showing a decrease in the total assets of the business.
- The loss will also affect the overall profitability of the business, which will be reflected in the balance sheet.
Provision for Doubtful Debts
- Given that debtors are given 30,000, a provision for doubtful debts of 5% needs to be created against the debtors.
- This provision is necessary to account for the possibility that some debtors may default on their payments.
- By creating this provision, the business is ensuring that it has set aside funds to cover potential losses from bad debts.
In conclusion, the dishonor of a bill of exchange will have a negative impact on the business's revaluation account and balance sheet. It is important to create provisions for doubtful debts to account for potential losses from debtors who may default on their payments.
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Effect of Dishonored Bill of Exchange on Revaluation Account and Balance Sheet and in case if debtors are given 30,000 and provision for doubtful debts 5% to be created against debtors.?
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Effect of Dishonored Bill of Exchange on Revaluation Account and Balance Sheet and in case if debtors are given 30,000 and provision for doubtful debts 5% to be created against debtors.? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Effect of Dishonored Bill of Exchange on Revaluation Account and Balance Sheet and in case if debtors are given 30,000 and provision for doubtful debts 5% to be created against debtors.? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Effect of Dishonored Bill of Exchange on Revaluation Account and Balance Sheet and in case if debtors are given 30,000 and provision for doubtful debts 5% to be created against debtors.?.
Effect of Dishonored Bill of Exchange on Revaluation Account and Balance Sheet and in case if debtors are given 30,000 and provision for doubtful debts 5% to be created against debtors.? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Effect of Dishonored Bill of Exchange on Revaluation Account and Balance Sheet and in case if debtors are given 30,000 and provision for doubtful debts 5% to be created against debtors.? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Effect of Dishonored Bill of Exchange on Revaluation Account and Balance Sheet and in case if debtors are given 30,000 and provision for doubtful debts 5% to be created against debtors.?.
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