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G.S. Arora

57 Points Posted on 21 April 2013

What is the difference between provision for bad debts and provision for doubtful debts?

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Deepak Gupta

CA Student

8353 Points Posted on 21 April 2013

Originally posted by : G.S. Arora
	What is the difference between provision for bad debts and provision for doubtful debts?

Provision for doubtful debt indicates that certain debtors are expected to be bad debts and on date of preparation of balance sheet, such doubt persists.
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Provision for bad debt means certain debtors have become bad on the date of preparation balance sheet which were not bad debts till balance sheet date.
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	Doubt		Provision for doubtful debt
31/3 (B/S date)		B/S preparation date

	Bad Debt		Provision for bad debt
31/3 (B/S date)		B/S preparation date

work is worship

Service

1392 Points Posted on 21 April 2013

Provision for Bad debts indicates , that certain debtors have become bad.. it is a sure loss, irrecoverable on a given date and is written off from the trade debtors. an over aged debtors usually turn out to be bad debtors.

provision for doubtful debts is created based on estimation that the certain percentage of debtors may turn out to be doubtful debts. a percentage is worked out based on the debtor's collection period and general economic environmen