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chapter 8: irrecoverable debts and allowance for receivables

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  • 1. Multiple-choice
    2 minutes
    1 pt

    an allowance for receivables of £4,000 is required at the end of a reporting period. the allowance for receivables brought forward from the previous period is £2,000. what's the impact of the profits?

    increase by £4,000

    decrease by £4,000

    increase by £2,000

    decrease by £2,000

  • 2. Multiple-choice
    2 minutes
    1 pt

    on 1 Jan 20x5 Plodd had an allowance for receivables £1,000. during 20x5, he wrote off debts of £600 and was paid £80 by the liquidator of a company whose debts had been written off completely in 20x4. at the end of 20x5 it was decided to adjust the allowance for receivables to £900. what is the net expense for irrecoverable debts in the P&L for 20x5?

    £420

    £580

    £620

    £780

  • 3. Multiple-choice
    2 minutes
    1 pt

    smith has receivables totalling £16,000 after writing off irrecoverable debts of £500, and he has an allowance for receivables brought forward of £2,000. He wishes to carry forward an allowance of £800.

    what will be the effect on profit of adjusting the allowance?

    £700 decrease

    £700 increase

    £1,200 decrease

    £1,200 increase

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