If actual bad debts are more than the provision for bad debts, then there will be a
A)Credit balance of Provision for Bad Debts Account
B)Debit balance of Provision for Bad Debts Account
C)Debit balance of Bad Debts Account
D)Debit balance of Discount on Debtors Account

Question

Quizplus · Accepted Answer

CWhen actual bad debts exceed the provision for bad debts, it indicates that the losses from uncollectible accounts are greater than anticipated. This results in a debit balance in the Bad Debts Account because the actual bad debts are recorded as an expense, increasing the debit side of the account. Additionally, the Provision for Bad Debts Account will also show a debit balance because the provision (a credit balance meant to anticipate future bad debts) will be reduced as it is used to write off the actual bad debts, and if the actual bad debts exceed the provision, it effectively depletes the provision and requires additional bad debt expense recognition, leading to a debit balance.

If Actual Bad Debts Are More Than the Provision for Bad