Multiple choice

Which of the following entries is correct in respect of reserve for discounts on accounts payable?

   
(a) Profit & Loss A/c
To Reserve for Discount on Accounts Payable A/c Dr.
(b) Accounts Payable A/c
To Profit& Loss A/c Dr.
(c) Reserve for Discount on Accounts Payable A/c
To Profit & Loss A/c Dr.
(d) Reserve for Discount on Accounts Payable A/c
To Accounts Payable A/c Dr.

  1. (a)

  2. (b)

  3. (c)

  4. (d)
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Accounts payable (creditors) carries a credit balance. Hence, a reserve created on creditors will be debited and P & L a/c would be credited against it.

Reserve for Discount on Accounts Payable A/c To Profit & Loss A/c

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