11 June 2008
Bad debts are irrecoverable amounts. Amount involved is resonably significant. When efforts made to realise the amt fails, or it is considered that, such effort will not yeild desired reasult, the amt is treated as bad debt.
Dr. balances w/off(often used term is sundry balance w/off) is writting off of small/petty balances.
Since nature of both type of transaction are different, separate accounts should be kept.
More over, allowability of both type of expense are governed by different sections under IT Act.
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