August 24, 2007
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What is the provision for bad debts?
The provision for bad debts might refer to the balance sheet account also known as the Allowance for Bad Debts, Allowance for Doubtful Accounts, or Allowance for Uncollectible Accounts. In this case Provision for Bad Debts is a contra asset account (an asset account with a credit balance). It is used along with the account Accounts Receivable in order to report the net realizable value of the accounts receivable.
Provision for Bad Debts might also be an the income statement account also known as Bad Debt Expense or Uncollectible Account Expense. In this situation, the Provision for Bad Debts reports the credit losses that pertain to the period shown on the income statement.
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11 Responses to “What is the provision for bad debts?”
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Very helpful…but should have examples
whsat is the Journal Entry for Bad debts and Provision for Doubtful Debts. Show separately.-
Please explain me depreciation in details with journal entries.and bad debts provision
This is very useful for my daily work. Thanks a lot.
please explain 3 methods of bad and doubtful provision
goo dbut should include a revision kit
Provisions are debit in the P & L initially and adjusted there after for increases or decreases.Now, what happens to the funds in that account?
What is the difference between provision for bad debts & bad debts written off? Is it same?
Provision for bad debts is like a reserve created for any specific purpose i.e.,Bad debt.It shows himself as expenses but its a fund created to adjust the bad debts.when the Provision is created then the entry is Profit & Loss A/c - - - - - Dr.
To Provision for Bad Debts.
And when bad Debt is actually happen then it is adjusted with the Provision for Bad Debt Accounts & the entry is
Provision for Bad Debts - - - - - - Dr.
To bad debt A/c
I an allownace for doubtful accounts a contra-asset or a liability?
Clear and simple! just what I wanted, thanks!