Bad debts for the previous year debtors are treated as Prior period expenses or Current Year expenses?
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Accounting standard -5
Replies (2)
prior period items are the incomes or expenses which arises in a current period as a result of errors or omissions in one or more prior period eg incorrect rate of depreciation.
so bad debts are the part of ordinary course of business. it does not matter whether it relates to present or future.
however it is better to make adequate provision
however it is better to make adequate provision
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