![]() ![]() ![]() When doubtful debt is realized, the amount is credited to the debtor's account. The amount is credited to a bad debt recovery account or bad debt dividend account and its balance is transferred to the profit and loss account. Provision for doubtful debt is created which is a charge against profit that may cover the loss if the doubtful debt turns out as bad debt. The debtor's account, whose debt is recognized as doubtful is never closed.Īmount of bad debt is deducted from the amount of sundry debtors and the loss arising due to bad debt can be charged against the Profit and Loss Account or it can be adjusted against Provision for bad debts account. it may or may not be received.īad Debt Account (Debit), Debtor's Account (Credit) Explanation of Provision for Bad Debtssīad Debts amounts to that portion of the debts which are either irrecoverable or whose probability of recovery is very rare.ĭoubtful Debt is the debt whose recovery is not certain, i.e.This post will enlighten you on the difference between Bad Debt and Doubtful Debt. If out of the total sum due, a certain percentage of the sum is not recovered due to non-payment, and the amount due from debtors is called debt. So, the customers to whom goods are sold on credit are called debtors.Īlso Read: Difference Between Debtors and Creditors What is a Debt? However, all the goods are not sold in cash, and goods on credit are allowed to a number of customers. Goods and services are sold for the purpose of generating revenue for the business. ![]()
0 Comments
Leave a Reply. |
Details
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |