The entry for creating a Provision for bad debts is_____________?
ADebit Provision for Bad Debts A/c and credit Profit & Loss A/c
BDebit Provision for Bad Debts A/c and credit Debtors A/c
CDebit Profit and Loss A/c and credit Provision for Bad Debts A/c.
DDebit Debtors A/c and credit Provision for Bad Debts A/c
Correct answer
C. Debit Profit and Loss A/c and credit Provision for Bad Debts A/c.
Explanation
Provision for bad debt is a charge against profit and therefore, the entry for creating provision for bad debts is done by debiting P&L A/c and crediting provision for bad debts account.