The creation of provision for doubtful debts given as an adjustment requires____________?
ACredit Profit & Loss Account and deduct the provision from debtors
BCredit Profit and Loss Account and add the provision to debtors
CDebit Profit & Loss Account and add the provision to debtors
DDebit Profit and Loss Account and deduct the provision from debtors
Correct answer
D. Debit Profit and Loss Account and deduct the provision from debtors
Explanation
The adjustment for provision for bad debts account given in the adjustments is to debit P&L A/c and deduct from Sundry Debtors, the amount of provision for bad debts. Provision for bad debts is created against Sundry Debtors and therefore deducted from Sundry Debtors and Debited to P&L A/c as it is a charge against P&L A/c.