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Friday, June 4, 2010

Provision for Bad and Doubtful Debts

Doubtful debt denotes the amount of debtors which may not be recoverable. It is an expected loss. To meet such loss, some amount set aside as provisions which is called provision for doubtful debts. It is calculated a fixed percentage of sundry debtors. While posting it, provision for bad or doubtful debt is shown on the debit of profit and loss account and also shown as a deduction from debtor on the assets side of the balance sheet.

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