Question

If bad debt of previous year from Ram is recovered during the year, it will
be credited to...........Ac.
​

Answer 1

Answer:

If a customer’s balance, i.e. his debt is declared bad, then the amount needs to be written off (deducted) from the Debtors (or sales) ledger. This is done as per the principle of prudence as a bad debt appearing in the Debtors’ Balance will represent itself as an asset and thus misstate the financial reports. So the amount needs to be written off immediately in the books of accounts by crediting the Customer’s Account in the Debtors ledger and debiting the Bad Debts Account in the general ledger. At the end of the accounting period, the balance in the Bad Debts Account is transferred to the Profit and Loss Account’s debit side, so that the Bad Debts can finally be accounted as a loss.

Answer 2

Cash/Bank a/c dr

To bad debts a/c

So bad debt will credited

Explanation:

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