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    When it is certain that a debt won’t be recovered, which of the following i

    When it is certain that a debt won’t be recovered, which of the following is correct
    
    
    
    1.Which of the following is the effect on net income if a business decreases provision for doubtful debts?
    A)It will increase net income
    B)It will decrease net income
    C)No effect
    D)It will increase gross profit and net income
    2.A firm has not recorded the bad debts by mistake. Which of the following is the effect of bad debts omission?
    A)Net profit would decrease
    B)Net profit would increase
    C)Gross profit would overstate
    D)Gross profit would understate
    3. When it is certain that a debt won’t be recovered, which of the following is correct?
    A)Provision for bad debt is created
    B)Account receivable is credited
    C)Bad debts is credited
    D)Sales is debited
    4.A recovery of bad debt 
    A) increases net income 
    B) decreases net income 
    C) increases gross profit
    D) increases gross profit and net income 
    5.The opening balance of “provision for doubtful debts account” is $1000 whereas the closing balance of debtors account is 100,000. What amount of provision for doubtful debts should be charged to income statement using a 5% provision for doubtful debts for the current accounting period?
    A)$5000
    B)$4000
    C)$2000
    D)$1000 
    
    
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  1. When it is certain that a debt won’t be recovered, which of the following is correctWhen it i
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