Accounting Multiple Choice Question – 30 May 2021

At the end of a financial period, a business has the following balances.

What should the business do if it wishes to maintain the bad debt provision at 5 % of debtors?

Select ONE answer:

1. decrease the existing provision by £58
2. increase the existing provision by £58
3. decrease the existing provision by £71 
4. increase the existing provision by £71 

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

1. Not correct
2. Correct ==> £10,620 – £260 = £10,360 * 0.05 = £518 – £460 ==> Increase £58
3. Not correct
4. Not correct

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