Bad debts recovered is:
Correct answer: A. Credited to P&L A/c
- A. Credited to P&L A/c
- B. Debited to P&L A/c
- C. Reduced from debtors in Balance Sheet
- D. Added to debtors in Balance Sheet
Explanation
Bad debts recovered are a recovery of an amount previously written off, so they are treated as income and credited to Profit and Loss Account. They are not added back to the debtors balance because the original receivable was already removed.
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About Accounting Principles
Accounting principles explain the rules used to record, classify and report business transactions. Coverage includes the accounting equation, double-entry system, accrual and cash bases, matching and prudence concepts, consistency, going concern, business entity, and the difference between capital and revenue items.
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