Qualification > Commerce
help in accounting paper 3 plz
7ooD:
loool sry bani i thought u r a boy now this is an error of commision correction is debit female bani credit male bani :p
Monica:
ok when the provision for last year was 200 and now it is 150, this means u will decrease the provision which is an income for the business... so like this a balance b/d will 200 on the credit side of the provision account and then becuz u want to decrease it by 50., u will put P/L on the debit side as 50... now the balance c/d will be 150...... hope u got that.. :-\
Bani:
--- Quote from: 7ood on May 30, 2009, 10:15:13 pm ---THANKZZZZ......Zzz...ZzZ ladies so much ya i have a small doubt that in provision for doubtful debts if we had been given last year provision which for example was 200 and this year 150 i memorized the enteries in the provision accöunt but never understood them the enterie r deßit balance c/d 150 and credit ßalance b/d 200 so do i have to memorize it or there is a point behind dat
--- End quote ---
Ok, provision for doubtful debts is simply recording the probable non-payments by the debtors. Now, using your example, the question would probably mention that On 1st May 2009(for example) a trader had a provison for doubtful debts amounting to $200 (meaning that the 200 is the last year's b/d balance.
provison for doubtful debts is a credit balance. I'll tell you the reason in a moment.
So, first write down the balance $200 in the credit side. Then the question mentions that the provison for doubtful debts was reduced to $150 (this means that at te end of the year, the provision for doubtful debts will have a credit balance of $200) Now, its a credit balance because its going out of the account and being debited (subtracted from gross profit) in the trading account. Now, you know that the balance at start is $200 credit and the balance at the end is $150, what amount needs to be debited to lower the credit balance to 150?
(200-150=50), so, you would debit the provison for doubtful debts with $50 after entering the opening balance of $200, to get the bredit balance of $150.
Now, in this case, if u see, the prov for doubtful debts has decreased. Which, means this would be an income in the trading account; the decrease of $50 would be added(credited) to the gross profit. The decrease is an income because the business would be transfering some of the provision back into the firm's revenue
I hope this helped. Any confusions regarding this, please feel free to ask. :)
Bani:
--- Quote from: Monica on May 30, 2009, 10:35:28 pm ---ok when the provision for last year was 200 and now it is 150, this means u will decrease the provision which is an income for the business... so like this a balance b/d will 200 on the credit side of the provision account and then becuz u want to decrease it by 50., u will put P/L on the debit side as 50... now the balance c/d will be 150...... hope u got that.. :-\
--- End quote ---
hahaha :) I just saw you replied after I had posted my long description hmmmmmmm
Bani:
--- Quote from: 7ood on May 30, 2009, 10:18:05 pm ---loool sry bani i thought u r a boy now this is an error of commision correction is debit female bani credit male bani :p
--- End quote ---
Hahahahahaha :D We all are too full of Accounting, aren't we ;)? hehehehe I like ur sense of humour ;D keep it up, by practicing more for Accounting :P ;D
Navigation
[0] Message Index
[#] Next page
[*] Previous page
Go to full version