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SSC Financial and Cost Accounting P-1 QUESTION #9632
Question 1
A provision for bad debts of Rs. 1,800 is created on total debtors of Rs. 35,000 at year-end. During the year, bad debts of Rs. 1,230 had already been written off directly. How will these items be presented in the Balance Sheet?
  • Debtors Rs. 35,000 less Provision Rs. 1,800 = Rs. 33,200; Bad debts of Rs. 1,230 shown separately✔️
  • Debtors Rs. 36,230 less Provision Rs. 3,030 = Rs. 33,200
  • Debtors Rs. 33,770 (after writing off Rs. 1,230); less Provision Rs. 1,800 = Rs. 31,970
  • Debtors Rs. 35,000; Provision Rs. 1,800 deducted in P&L only, not from debtors
Correct Answer Explanation
Bad debts written off (Rs. 1,230) have already reduced the debtors ledger. The remaining debtors balance of Rs. 35,000 is the figure after write-offs. The provision for bad debts (Rs. 1,800) is shown as a deduction from debtors in the Balance Sheet: Rs. 35,000 – Rs. 1,800 = Rs. 33,200. The provision appears as a deduction in current assets, not just in P&L.