Irrecoverable debts and allowance for irrecoverable debts — Paper 1 · IGCSE Accounting (9-1) 0985

3 On 2 April Nina received a cheque from Zaffar, a credit customer. On 12 April the cheque was returned unpaid by the bank. What entry would Nina make on 12 April? account to be debited account to be credited A irrecoverable debts bank B irrecoverable debts Zaffar C provision for doubtful debts Zaffar D Zaffar bank

1 marks

Answer: D

This question in 0985/11 May/June 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 0985/11 May/June 2020

27 Ahmed provided the following information. $ trade receivables at 1 January 2019 15 000 for the year ended 31 December 2019: credit sales 85 000 cash sales 12 000 cheques received from trade receivables 65 000 irrecoverable debts 2 000 By how much had the trade receivables increased by the end of the financial year? A $18 000 B $30 000 C $33 000 D $45 000

1 marks

Answer: A

This question in 0985/11 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 0985/12 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 0985/12 May/June 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 0985/12 Oct/Nov 2020

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 0985/11 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 0985/11 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 0985/12 May/June 2021

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 0985/11 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 0985/11 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 0985/12 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 0985/12 Oct/Nov 2022

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 0985/11 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 0985/11 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 0985/12 May/June 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 0985/12 Oct/Nov 2023

30 Ahmed provided the following information. $ trade receivables at 1 January 2022 15 000 for the year ended 31 December 2022: credit sales 85 000 cash sales 12 000 cheques received from trade receivables 65 000 irrecoverable debts 2 000 By how much had the trade receivables increased by the end of the financial year? A $18 000 B $30 000 C $33 000 D $45 000

1 marks

Answer: A

This question in 0985/12 Oct/Nov 2023

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 0985/11 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 0985/12 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 0985/12 May/June 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 0985/12 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 0985/12 Oct/Nov 2024

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 0985/11 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 0985/12 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 0985/12 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 0985/12 May/June 2025