Accounts Preparation practice assessment 1 Task 4

anthonyj87

Hi there,

Just wondering if someone could clear something up for me regarding the 4th task on the Accounts Preparation sample assessment 1 provided in the study support. In this task it provides a number of accounts with brought down balances including one labelled 'irrecoverable debts'. As the irrecoverable debts account is an expense account I would expect the brought down balance to be a debit, but it's not, it's got a credit balance of £230.00???

If the account had been labelled 'irrecoverable debts provision' then yes that would make sense or even if it was labelled 'adjustment for irrecoverable debt provision' which can be one or the other, but as far as I was aware the 'irrecoverable debts' account can only ever have a debit balance... or so I thought. Am I missing something here or is this just a mistake on the assessment?

rakeshsuwal

Irrecoverable debts if adjusted will appear on credit side.
I haven't checked the question but reading at yours problem I realised you may be able to solve it with just the understanding adjustment.

Danilo13

On the 'Irrecoverable debts' account, an amount is entered on the credit side in order to transfer the value to the 'statement of profit or loss', so the balance has a NIL value afterwards. I don't think the assessment mean that there was credit balance b/d, anthonyj87.