Provision for bad and double debts in companies final accounts is treated in?

A. trading account
B. profit and loss account
C. fund flow statement
D. cash flow statement

Correct Answer:

Option B – profit and loss account

Explanation

The Provision for Bad and Doubtful Debts will appear in the Balance Sheet. Next year, the actual amount of bad debts will be debited not to the Profit and Loss Account but to the Provision for Bad and Doubtful Debts Account which will then stand reduced.