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Accountancy
answered on 26-Feb-20 17:54
On 1st jan provision for doubtful debts existed at 40,000.Trade receivables on 31-12-17 were 15,00,000;bad debts totalled 1,00,0000.it is required to write off the bad debts and create a provision equal to 5% of trade receivables balances. In the above problem when we create provision for bad debts account why we enter open balance of provision for doubtful debts in credit side of provision account. Can any one suggest me so that it would be helpful
latest answer
When the amount is not recoverable we call it bad debt and reduce it from debtors. Bad Debts A/c Dr. [This is ultimately transferred to P&L] To Trade Receivables/Sundry Debtors [Here actual balance in debtor is being reduced] What is a provision for bad debt? Basically , the business is keeping aside some amount to take care of bad debts which might arise in future. Say Current debtors are 1,00,000 and the company expects 5% will not pay (based on past experience). For this the company would make a provision of Rs.5,000. Here the company would not credit the debtors by 5,000 (as we do in case of actual bad debt) because the debtors is not yet bad. So for this we create a provision (set aside amount from profits). Profit & Loss Dr. To Provision for bad debt (This will always be a credit balance) Now in next year say 0,000 of debtors became bad. Bad Debts Dr. 9,000 To Debtors 9,000 Now the bad debt is an expense which has to be transferred to P&L. Out of 9,000 , 5,000 was already provided last year. So we will use that provision now. Dr. Provision for bad debt 5,000 Dr. Profit & Loss 4,000 (for balance ) Cr. Bad debts 9,000. For any new provision to be created, similar entries as passed earlier. [These are actual entries - In exams we can combine and pass entries]
sai t
CA Foundation
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Practice questions
Accountancy
answered on 26-Feb-20 17:55
Sir where can I get practice questions for CA Foundation accounts which is helpful for preparing for exams
latest answer
Refer to past exam questions and RTPs.
sai t
CA Foundation
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1
653
Dividend Declared treatment in financial statement
Accountancy
answered on 26-Feb-20 17:57
Dividend declared means declared by the shareholders in annual general meeting. And AGM happens after the financial statement gets approved by board & gets audited by auditor And we prepare financial statement on 31st March Then how dividend Declared can be accounted in that financial year ?
latest answer
Dividends declared on AGM (Say in September 2019) will be accounted as dividend in financial year 2019-20. The concept of provision for dividend no longer exists. Dividend is accounted only when approved - by BOD in case of interim dividends and by Shareholders in AGM in case of Final dividend.
Chandan Subudhi
CA Final
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6
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Insurance claim
Accountancy
answered on 26-Feb-20 17:57
Sir, in this they add firefight exp after apply of average clause but as per theory we have to deduct the fire fight expenses from salvage value
latest answer
Fire fight expenses is generally deducted from salvage value.
subramanyam yendakuarthi
CMA Final
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840
Preliminary expenses
Accountancy
answered on 24-Feb-20 22:26
Should we account for full amount of preliminary expense in year 1 or charge it over a period in p&l ?
latest answer
Okay sir
Raviteja Kusumanchi
Qualified CA
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Preparation of financial statements
Accountancy
answered on 24-Feb-20 22:26
Can we disclose interim dividend as finance cost instead of showing as an appropriation out of profits ?
latest answer
Okay sir
Raviteja Kusumanchi
Qualified CA
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618
Departmantal accounts
Accountancy
answered on 24-Feb-20 05:59
Sir, in case of un realized profits in opening stock or closing stock, stock reserve account should be credited or debited respectively with that portion of un realized profit. In which account should stock reserve account is credited or debited. TRADING ACCOUNT OR P/L a/c. Sir saidp in different questions at two different places
latest answer
IndigoLearn
Star Ca
CA Inter
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AS 29 Meaning of Provision
Accountancy
answered on 24-Feb-20 06:13
In the annexed pictures, there is a meaning of Provision and a case study. In the given case study, amount is clearly provided and thus as per definition we didn't apply any substantial degree of estimation, then how come we are Calling it as a Provision? Pls explain.
latest answer
Your understanding is correct. It would be a liability once the amount is ascertained. However, at times in cases of environmental damages etc, the amount incurred may be more than the original estimate. Hence could be called a provision as well.
Rahul Sharma
CA Inter
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INSURANCE CLAIMS
Accountancy
answered on 02-Mar-20 22:20
Which expenses of these following expenses are treated as insured standing charges expenses
latest answer
Yes sir normal g/p means = net profit+ insured standing charges. #g/p for additional expenses is g/p%on adjusted annual turn over. Satya.. Sir clearly. Am i correct
subramanyam yendakuarthi
CMA Final
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13
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Redemption of debenture
Accountancy
answered on 22-Feb-20 20:15
Can I able to get this chapter alone for online classes?
latest answer
Okie thankyou
sai karthi
CA Final
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