provision for doubt ful debts?

Hi Utsav,

Accounting entry for provision for doubtful debts will be;

       Bad debts expense/Provision for doubtful debts Dr.

       To Allowance for doubtful debts Cr.

It is a liability because the provision represents the amount that you put aside in accounts to cover a future liability. And, also as per the definition, it is a probable obligation arising out of the past events resulting into outflow of future economic benefits.