1. The term ‘provision’ is generally used to indicate known : A depreciation B losses C none of…

1. The term ‘provision’ is generally used to indicate known :

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A depreciation

B losses

C none of these

2. Reserves are the items of :

A current liabilities

B owners’ equity

C none of these

3. Reserves arise from capital receipts are known as :

A capital reserve

B reserve fund

C none of these

4. Provisions are :

A external transactions

B internal transactions

C none of these. 5. Reserves that are created are mostly :

A general

B specific

C none of these.

6. Goods are sold on credit to —-

A known customers

B unknown customers

C employees.

7. On 1.1.2012 M/s A & Co had a provision for bad debts of ~ 10,880. The bad debts during the year 2012 amounted to ~ 9,040. The debtors as at 31.12.2012 were ~ 2,24,000. Provision for bad debts @ 5% is maintained by the business. Bad debts during 2013 and 2014 were ~ 11,680 and ~ 4,160 respectively. The sundry debtors as at 31.12.2013 and 31.12.2014 were ~ 2,88,000 and ~ 1,36,000 respectively. Prepare necessary Ledger Accounts in the books of M/s A & Co. Also show how these would appear in the Profit and Loss Account and Balance Sheet for the year 2012 to 2014.