re:BAD DEBTS

This query is : Resolved

gurru (Querist)
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01 June 2010 DEAR SIR
WE ARE A PROPRIETOR FIRM. WE HAVE STARTING PREPARING OUR BALANCE SHEET FOR THIS YEAR. I WANT TO KNOW WHETHER I SHOULD MAKE PROVISION FOR BAD DEBTS IN OUR BALANCE SHEET.

Rahul Gupta

Rahul Gupta (Expert)
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01 June 2010 Provision for Bad Debts is purely the management/proprietor decision. There is no mandatory requirement.
In case , you think that there will be bad debts during the year, provide the provision for bad debts. Otherwise, not required.

Manmohan ACA, CS

Manmohan ACA, CS (Expert)
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01 June 2010 agree

CA Shiv

CA Shiv (Expert)
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01 June 2010 well practically provision on Bad debts is never made....practicaly while preparing balancesheet it is not done..
If you think its a bad debts than charge it to BD this year or next year....

A. Sankaranarayana

A. Sankaranarayana (Expert)
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01 June 2010 As per my knowledge, business establishment write off bad debts after 3rd year from the date of billing, - at the time of Income Tax Scrunity, Officers asked the details and on what basis v provide bad debts etc., Instead of debit bad debts, debit Discount Allowed Account, it would not catch the Officer's eye more.

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