Question

5 A business keeps a separate sales ledger. Its nominal ledger includes a sales ledger control account. Which entry corrects the nominal ledger when the sales journal is undercast? account to debit | account to credit sales suspense trade receivables sales sales suspense trade receivables D sales 6 Which statement is correct? A B The balance on the irrecoverable debts account is carried down to the next accounting period. The balance on the irrecoverable debts account is treated as an expense in the income statement. The balance on the provision for doubtful debts account is calculated before the deduction of irrecoverable debts. The balance on the provision for doubtful debts account is not included in a trial balance. C D

Answer 1

5.

When sales journal is undercast, trade receivables are debited and sales is credited. In this way, the balances in trade receivables and sales accounts are increased and the error is rectified.

Correct option is (D)

6.

The balance on the irrecoverable debt account is treated as an expense in the income statement.

Correct option is (B)

Irrecoverable debt represents the debt which is no longer receivable and hence it is treated as bad debt and expensed in the current accounting period.

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