The creation of provision for doubtful debts given as an adjustment requires
A)Debit Profit and Loss Account and deduct the provision from debtors
B)Credit Profit & Loss Account and deduct the provision from debtors
C)Credit Profit and Loss Account and add the provision to debtors
D)Debit Profit & Loss Account and add the provision to debtors

Question

Quizplus · Accepted Answer

Creating a provision for doubtful debts involves debiting the Profit and Loss Account, which decreases net income, and deducting the provision from the debtors on the balance sheet to reflect the expected uncollectible amount.

The Creation of Provision for Doubtful Debts Given as an Adjustment