Irrecoverable debts and allowance for irrecoverable debts — Paper 1 · IGCSE Accounting 0452

16 A business maintains a provision for doubtful debts of 5% of trade receivables. The balance on the provision for doubtful debts account on 31 December 2018 was $2700. On 31 December 2019 the trade receivables amounted to $50 000. How will the provision for doubtful debts be recorded on 31 December 2019? provision for $ income statement $ doubtful debts account A credit 200 added to gross profit 200 B credit 200 deducted from gross profit 200 C debit 200 added to gross profit 200 D debit 200 deducted from gross profit 200

1 marks

Answer: C

This question in 0452/12 Feb/March 2020

18 Joseph sells goods on credit and maintains a provision for doubtful debts. He wants to increase his provision for doubtful debts by $250. Which journal entry records an increase in the provision for doubtful debts? debit credit $ $ A credit customer 250 income statement 250 B income statement 250 credit customer 250 C income statement 250 provision for doubtful debts 250 D provision for doubtful debts 250 income statement 250

1 marks

Answer: C

This question in 0452/11 May/June 2020

19 Which items are deducted from the gross profit when calculating the profit for the year? 1 balance on the provision for doubtful debts account 2 carriage paid on goods supplied to customers 3 drawings made by the owner during the year 4 wages paid to employees during the year A 1, 2 and 3 B 1 and 4 C 2 and 3 only D 2 and 4

1 marks

Answer: D

This question in 0452/11 May/June 2020

28 A trader provided the following information. $ trade receivables at start of the year 5 000 trade receivables at end of the year 8 500 cash received from trade receivables 34 700 irrecoverable debts written off 200 discount allowed 185 What was the amount of the credit sales? A $38 200 B $38 385 C $38 400 D $38 585

1 marks

Answer: D

This question in 0452/13 May/June 2020

34 A trader wrote off the balance on a credit customer’s account as irrecoverable. Which accounting principle was applied? A business entity B consistency C money measurement D prudence

1 marks

Answer: D

This question in 0452/13 May/June 2020

16 The balances in the books of Jason on 1 July 2019 included the following. $ trade receivables 64 200 provision for doubtful debts 1 284 Trade receivables at 30 June 2020 were $58 500, of which $500 should be written off as irrecoverable. Jason wants to maintain his provision for doubtful debts at 2% of trade receivables. What was the change in the provision for doubtful debts at 30 June 2020? A $114 decrease B $124 decrease C $376 increase D $386 increase

1 marks

Answer: B

This question in 0452/11 Oct/Nov 2020

18 Beena maintains a provision for doubtful debts of 3% of the trade receivables at the end of each financial year. On 1 September 2019 the provision for doubtful debts was $900. On 31 August 2020 the trade receivables amounted to $42 800. Which journal entry did Beena make on 31 August 2020? debit credit $ $ A income statement 384 provision for doubtful debts 384 B income statement 1284 provision for doubtful debts 1284 C provision for doubtful debts 384 income statement 384 D provision for doubtful debts 1284 income statement 1284

1 marks

Answer: A

This question in 0452/12 Oct/Nov 2020

16 The balances in the books of Jason on 1 July 2019 included the following. $ trade receivables 64 200 provision for doubtful debts 1 284 Trade receivables at 30 June 2020 were $58 500, of which $500 should be written off as irrecoverable. Jason wants to maintain his provision for doubtful debts at 2% of trade receivables. What was the change in the provision for doubtful debts at 30 June 2020? A $114 decrease B $124 decrease C $376 increase D $386 increase

1 marks

Answer: B

This question in 0452/13 Oct/Nov 2020

16 A book-keeper made the following ledger entry. account debited account credited bank debts recovered Which transaction has been recorded? A A credit customer has paid his account by the due date. B A late payment has been received for a debt not yet written off. C A payment has been received for a debt that had been written off. D An irrecoverable debt has been written off.

1 marks

Answer: C

This question in 0452/12 Feb/March 2021

17 The following accounts appeared in the ledger of Delta Limited. Total trade receivables account $ $ Jan 1 Balance b / d 30 000 Dec 31 Bank 109 000 Dec 31 Sales 101 000 Balance c / d 22 000 131 000 131 000 Provision for doubtful debts account $ $ Dec 31 Income statement 100 Jan 1 Balance b / d 1 200 Balance c / d 1 100 1 200 1 200 How had the total of trade receivables and the rate of provision for doubtful debts changed by the end of the year? total of trade rate of provision receivables for doubtful debts A decreased decreased B decreased increased C increased decreased D increased increased

1 marks

Answer: B

This question in 0452/12 Feb/March 2021

15 Why does a business maintain a provision for doubtful debts account? A to apply the accounting principle of prudence B to avoid profit for the year being understated C to have an accurate forecast of debts which will be uncollectible D to reduce the expense of irrecoverable debts in the future

1 marks

Answer: A

This question in 0452/11 May/June 2021

21 On 1 April 2020 Ahmed had a provision for doubtful debts of $290. The following journal entry was made on 31 March 2021. debit credit $ $ provision for doubtful debts 25 income statement 25 What was the provision for doubtful debts deducted from trade receivables in Ahmed’s statement of financial position on 31 March 2021? A $25 B $265 C $290 D $315

1 marks

Answer: B

This question in 0452/11 May/June 2021

20 Shilpa’s financial year ends on 30 April. On 31 March 2021 she wrote off a debt owed by Tahir as irrecoverable. Which entry did Shilpa make on 31 March 2021? debit credit A income statement Tahir B irrecoverable debts income statement C irrecoverable debts Tahir D Tahir irrecoverable debts

1 marks

Answer: C

This question in 0452/12 May/June 2021

20 Shilpa’s financial year ends on 30 April. On 31 March 2021 she wrote off a debt owed by Tahir as irrecoverable. Which entry did Shilpa make on 31 March 2021? debit credit A income statement Tahir B irrecoverable debts income statement C irrecoverable debts Tahir D Tahir irrecoverable debts

1 marks

Answer: C

This question in 0452/13 May/June 2021

14 Amit’s financial year ends on 31 December. The following account appeared in his sales ledger. Dipak account 2020 $ 2020 $ Jan 7 sales 3200 Jun 3 bank 1700 Oct 30 cash 230 Nov 21 ? 1270 3200 3200 What does the entry on 21 November represent? A an irrecoverable debt B discount allowed C the balance carried down D the recovery of a debt previously written off

1 marks

Answer: A

This question in 0452/11 Oct/Nov 2021

15 Sally wished to increase the balance on the provision for doubtful debts account at the end of the financial year. How should this increase be recorded? debit credit A income statement provision for doubtful debts account B irrecoverable debts account provision for doubtful debts account C provision for doubtful debts account income statement D provision for doubtful debts account irrecoverable debts account

1 marks

Answer: A

This question in 0452/11 Oct/Nov 2021

15 Sally wished to increase the balance on the provision for doubtful debts account at the end of the financial year. How should this increase be recorded? debit credit A income statement provision for doubtful debts account B irrecoverable debts account provision for doubtful debts account C provision for doubtful debts account income statement D provision for doubtful debts account irrecoverable debts account

1 marks

Answer: A

This question in 0452/13 Oct/Nov 2021

16 The following errors were found after a statement of financial position had been prepared. 1 A loan repayable in two year’s time had been included as a current liability. 2 A provision for doubtful debts should have been created. What is the effect of correcting these errors? current current non-current owner’s assets liabilities liabilities equity A decrease decrease increase decrease B decrease increase decrease increase C increase decrease decrease increase D increase increase decrease decrease

1 marks

Answer: A

This question in 0452/13 Oct/Nov 2021

19 Why would a business record the amount owing by a credit customer as an irrecoverable debt? A The customer has gone out of business. B The customer has liquidity problems. C The customer is making a loss. D The customer is not satisfied with the goods.

1 marks

Answer: A

This question in 0452/12 Feb/March 2022

20 Anji maintains a provision for doubtful debts at 5% of the trade receivables at the end of each financial year. At the start of the financial year, the trade receivables were $2000. At the end of the financial year, the trade receivables were $4500. Which entry would be made in the income statement for the financial year? A $125 as an expense B $125 as an income C $325 as an expense D $325 as an income

1 marks

Answer: A

This question in 0452/12 Feb/March 2022

19 Which statement about a debts recovered account is correct? A The account is used when an amount, previously written off, is received from a customer. B The account is used when doubtful debts are recovered. C The balance of the account is debited to the income statement at the end of the year. D The balance of the account is shown in the statement of financial position.

1 marks

Answer: A

This question in 0452/11 May/June 2022

20 Nula’s financial year ends on 31 December. She maintains a provision for doubtful debts of 5% of trade receivables. On 1 January 2021, the provision amounted to $800. On 31 December 2021, trade receivables owed $13 400, of which $600 was regarded as irrecoverable. How much was the provision for doubtful debts on 1 January 2022? A $600 B $640 C $660 D $670

1 marks

Answer: B

This question in 0452/11 May/June 2022

15 Nula’s financial year ends on 31 December. She maintains a provision for doubtful debts of 5% of trade receivables. On 1 January 2021, the provision amounted to $800. On 31 December 2021, trade receivables owed $13 400, of which $600 was regarded as irrecoverable. How much was the provision for doubtful debts on 1 January 2022? A $600 B $640 C $660 D $670

1 marks

Answer: B

This question in 0452/12 May/June 2022

15 Nula’s financial year ends on 31 December. She maintains a provision for doubtful debts of 5% of trade receivables. On 1 January 2021, the provision amounted to $800. On 31 December 2021, trade receivables owed $13 400, of which $600 was regarded as irrecoverable. How much was the provision for doubtful debts on 1 January 2022? A $600 B $640 C $660 D $670

1 marks

Answer: B

This question in 0452/13 May/June 2022

16 Parker received cash from Alexi for a debt that had been written off as irrecoverable. How should Parker record this in his accounts? account to be debited account to be credited A cash irrecoverable debts B cash debts recovered C debts recovered cash D irrecoverable debts cash

1 marks

Answer: B

This question in 0452/12 Oct/Nov 2022

18 A trader made the following entries in his ledger. account debited account credited irrecoverable debts Peter What was he recording? A A credit customer has failed to pay within the agreed time limit. B A debt which had been written off has now been recovered. C An amount owed by a customer cannot be recovered. D The trader has been unable to pay his supplier.

1 marks

Answer: C

This question in 0452/12 Feb/March 2023

19 The balances in the books of Julie on 1 July 2021 included the following. $ trade receivables 64 200 provision for doubtful debts 1 284 Trade receivables at 30 June 2022 were $58 500, of which $500 should be written off as irrecoverable. Julie wants to maintain her provision for doubtful debts at 2% of trade receivables. What was the change in the provision for doubtful debts at 30 June 2022? A $114 decrease B $124 decrease C $376 increase D $386 increase

1 marks

Answer: B

This question in 0452/12 Feb/March 2023

22 At the end of the financial year, Karim decided to increase his provision for doubtful debts. How will this affect his income statement and the statement of financial position? statement of income statement financial position A decrease expenses increase current assets B decrease expenses increase current liabilities C increase expenses decrease current assets D increase expenses decrease current liabilities

1 marks

Answer: C

This question in 0452/11 May/June 2023

27 P Limited maintains a provision for doubtful debts account. On 1 April 2022, this account had a balance of $6200. The provision should have been increased to $7400 on 31 March 2023, but this adjustment was not made. What was the effect of this error on the retained earnings in the statement of financial position on 31 March 2023? A overstated $1200 B overstated $7400 C understated $1200 D understated $7400

1 marks

Answer: A

This question in 0452/11 May/June 2023

18 On 2 January, Razia wrote off $450 owed to her by Annette, a credit customer, as irrecoverable. On 2 October, Annette paid $100 by cheque in part settlement of that debt. Which entries would Razia make on 2 October? account to be debited account to be credited A bank debts recovered B bank irrecoverable debts C debts recovered bank D irrecoverable debts bank

1 marks

Answer: A

This question in 0452/12 May/June 2023

13 On 1 August, the sales ledger control account had a debit balance of $1800. During August, a debt of $200 was written off as irrecoverable and $10 000 was received from credit customers. On 31 August, the credit customers owed $3000. What was the total of credit sales in August? A $7200 B $11 200 C $11 400 D $11 600

1 marks

Answer: C

This question in 0452/13 May/June 2023

18 On 2 January, Razia wrote off $450 owed to her by Annette, a credit customer, as irrecoverable. On 2 October, Annette paid $100 by cheque in part settlement of that debt. Which entries would Razia make on 2 October? account to be debited account to be credited A bank debts recovered B bank irrecoverable debts C debts recovered bank D irrecoverable debts bank

1 marks

Answer: A

This question in 0452/13 May/June 2023

20 Joseph sells goods on credit and maintains a provision for doubtful debts. He wants to increase his provision for doubtful debts by $400. Which journal entry records this increase in the provision for doubtful debts? debit credit $ $ A credit customer 400 income statement 400 B income statement 400 credit customer 400 C income statement 400 provision for doubtful debts 400 D provision for doubtful debts 400 income statement 400

1 marks

Answer: C

This question in 0452/11 Oct/Nov 2023

18 Imran maintains a provision for doubtful debts of 5% of the trade receivables at the end of each financial year. The balance on his provision for doubtful debts account on 1 January 2022 was $700. Trade receivables on 31 December 2022 owed $2000 more than they owed on 31 December 2021. How did the change in the provision for doubtful debts affect the profit for the year ended 31 December 2022? A $100 decrease B $100 increase C $800 decrease D $800 increase

1 marks

Answer: A

This question in 0452/12 Oct/Nov 2023

20 Joseph sells goods on credit and maintains a provision for doubtful debts. He wants to increase his provision for doubtful debts by $400. Which journal entry records this increase in the provision for doubtful debts? debit credit $ $ A credit customer 400 income statement 400 B income statement 400 credit customer 400 C income statement 400 provision for doubtful debts 400 D provision for doubtful debts 400 income statement 400

1 marks

Answer: C

This question in 0452/13 Oct/Nov 2023

17 A business maintains a provision for doubtful debts of 5% of trade receivables. The balance on the provision for doubtful debts account on 31 December 2018 was $2700. On 31 December 2019 the trade receivables amounted to $50 000. How will the required adjustment to the provision for doubtful debts be recorded? provision for $ income statement $ doubtful debts account A credit 200 added to gross profit 200 B credit 200 deducted from gross profit 200 C debit 200 added to gross profit 200 D debit 200 deducted from gross profit 200

1 marks

Answer: C

This question in 0452/12 Feb/March 2024

35 A trader decides to write off the balance owed by a credit customer as an irrecoverable debt. A credit entry is made in the account of the credit customer and a debit entry in the irrecoverable debts account. Which accounting principles are being applied? A business entity and realisation B consistency and materiality C duality and prudence D materiality and prudence

1 marks

Answer: C

This question in 0452/12 Feb/March 2024

17 Why does a trader maintain a provision for doubtful debts? 1. to ensure amounts owing to the business for which payment is unlikely to be received are regarded as an expense 2. to ensure the trade receivables of the business are not overstated, by providing for debts which are unlikely to be paid 3. to identify credit customers who are not able to settle their accounts by the end of the financial year 4. to provide for the amounts from credit customers which are unpaid at the end of the financial year A 1 and 2 B 1, 3 and 4 C 2 and 3 only D 2, 3 and 4

1 marks

Answer: A

This question in 0452/11 May/June 2024

18 Devendra prepared the following journal entry. debit credit $ $ irrecoverable debts 714 Tobias 714 Which statement is correct? A Devendra has provided for a doubtful debt owed by Tobias. B Devendra has received the amount due from Tobias. C Tobias cannot pay the amount due to Devendra. D Tobias paid an amount previously written off by Devendra.

1 marks

Answer: C

This question in 0452/12 May/June 2024

25 A company’s financial year ends on 31 March. On 31 March 2021 trade receivables were $45 000. On 31 March 2022 trade receivables were $41 000. An irrecoverable debt of $1000 is yet to be written off at 31 March 2022. The provision for doubtful debts is to be maintained at 5%. What is the effect of the irrecoverable debt and the adjustment to the provision for doubtful debts on the profit for the year ended 31 March 2022? A decrease $750 B decrease $800 C decrease $1200 D decrease $1250

1 marks

Answer: A

This question in 0452/12 May/June 2024

18 Devendra prepared the following journal entry. debit credit $ $ irrecoverable debts 714 Tobias 714 Which statement is correct? A Devendra has provided for a doubtful debt owed by Tobias. B Devendra has received the amount due from Tobias. C Tobias cannot pay the amount due to Devendra. D Tobias paid an amount previously written off by Devendra.

1 marks

Answer: C

This question in 0452/13 May/June 2024

25 A company’s financial year ends on 31 March. On 31 March 2021 trade receivables were $45 000. On 31 March 2022 trade receivables were $41 000. An irrecoverable debt of $1000 is yet to be written off at 31 March 2022. The provision for doubtful debts is to be maintained at 5%. What is the effect of the irrecoverable debt and the adjustment to the provision for doubtful debts on the profit for the year ended 31 March 2022? A decrease $750 B decrease $800 C decrease $1200 D decrease $1250

1 marks

Answer: A

This question in 0452/13 May/June 2024

19 Which statements about irrecoverable debts are correct? 1 They are an application of the historic cost principle. 2 They are debts which will not be paid by credit customers. 3 They increase the value of current liabilities. 4 They reduce the total value of trade receivables. A 1 and 2 B 1 and 4 C 2 and 3 D 2 and 4

1 marks

Answer: D

This question in 0452/11 Oct/Nov 2024

8 A trader had prepared her year-end financial statements. She later discovered that an adjustment to reduce the provision for doubtful debts by $100 had not been made. How did this error affect the trader’s statement of financial position? current assets capital $ $ A overstated 100 overstated 100 B overstated 100 understated 100 C understated 100 overstated 100 D understated 100 understated 100

1 marks

Answer: D

This question in 0452/12 Oct/Nov 2024

9 A trader’s draft income statement showed a profit for the year of $24500. The following errors were later discovered. 1 No adjustment had been made for accrued income of $8000. 2 Carriage inwards of $250 had been recorded as carriage outwards. 3 An increase in provision for doubtful debts of $120 had been treated as an addition to the gross profit for the year. What was the corrected profit for the year? A $32010 B $32260 C $32380 D $32740

1 marks

Answer: B

This question in 0452/12 Oct/Nov 2024

18 What is the journal entry required to close the irrecoverable debts account at the year end? account to be debited account to be credited A income statement irrecoverable debts B irrecoverable debts income statement C irrecoverable debts trade receivables D trade receivables irrecoverable debts

1 marks

Answer: A

This question in 0452/12 Oct/Nov 2024

19 Which statements about irrecoverable debts are correct? 1 They are an application of the historic cost principle. 2 They are debts which will not be paid by credit customers. 3 They increase the value of current liabilities. 4 They reduce the total value of trade receivables. A 1 and 2 B 1 and 4 C 2 and 3 D 2 and 4

1 marks

Answer: D

This question in 0452/13 Oct/Nov 2024

19 At the end of year 1, a trader created a provision for doubtful debts of 5% of trade receivables. At the end of year 2, she decided to increase the provision to 6%. The trader provided the following information. $ trade receivables at the end of year 1 4800 trade receivables at the end of year 2 7500 What was the amount for the provision for doubtful debts that should be included in the income statement for year 2? A $210 credit B $210 debit C $450 credit D $450 debit

1 marks

Answer: B

This question in 0452/12 Feb/March 2025

17 A provision for doubtful debts of 5% of trade receivables is maintained. At 1 January 2024, the provision for doubtful debts account had a credit balance of $240. At 31 December 2024, trade receivables owed $5200. It was decided that $200 of this amount was irrecoverable. Which entry was made in the provision for doubtful debts account on 31 December 2024? A debit $10 B credit $10 C debit $20 D credit $20

1 marks

Answer: B

This question in 0452/11 May/June 2025

17 Why does a trader write off money owed by a credit customer as an irrecoverable debt? A because the credit customer has not paid their account at the end of the trading period B because the credit customer has not paid their account by the due date C because the credit customer is no longer buying goods from the trader D because the credit customer is not able to pay their account

1 marks

Answer: D

This question in 0452/12 May/June 2025

18 Shilpa’s financial year ends on 30 April. On 31 March 2025, she wrote off a debt owed by Tahir as irrecoverable. Which entry did Shilpa make on 31 March 2025? debit credit A income statement Tahir B irrecoverable debts income statement C irrecoverable debts Tahir D Tahir irrecoverable debts

1 marks

Answer: C

This question in 0452/12 May/June 2025

21 Draft financial statements prepared at the end of the first year of trading show: • draft profit for the year of $24000 • trade receivables of $6300. An amount of $200 is to be written off as irrecoverable. A provision for doubtful debts is to be set at 1% of the remaining trade receivables. What is the revised profit for the year? A $23 737 B $23 739 C $23 800 D $23 939

1 marks

Answer: B

This question in 0452/12 May/June 2025

17 A provision for doubtful debts of 5% of trade receivables is maintained. At 1 January 2024, the provision for doubtful debts account had a credit balance of $240. At 31 December 2024, trade receivables owed $5200. It was decided that $200 of this amount was irrecoverable. Which entry was made in the provision for doubtful debts account on 31 December 2024? A debit $10 B credit $10 C debit $20 D credit $20

1 marks

Answer: B

This question in 0452/13 May/June 2025

19 Which statement about a provision for doubtful debts is correct? A It ensures that the amount of trade receivables at the year end is realistic. B It is an application of the going concern principle. C The level of the provision must be increased when sales are falling. D The profit for the year increases when the provision for doubtful debts is increased.

1 marks

Answer: A

This question in 0452/13 Oct/Nov 2025