Accounting for IGCSE & O level - The Fundamentals Of Accounting (Section 4 - No. 15)
If a business is to reduce its provision for doubtful debts, how should that transaction be recorded?
Credit income with the amount of the decrease.
Debit income with the amount of the decrease.
Debit trade receivables with the amount of the decrease.
Debit the provision for doubtful debts account.
Explanation
The provision for doubtful debts account is debited, and income is credited to decrease the provision.
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