01 June 2010
DEAR SIR WE ARE A PROPRIETOR FIRM. WE HAVE STARTING PREPARING OUR BALANCE SHEET FOR THIS YEAR. I WANT TO KNOW WHETHER I SHOULD MAKE PROVISION FOR BAD DEBTS IN OUR BALANCE SHEET.
01 June 2010
Provision for Bad Debts is purely the management/proprietor decision. There is no mandatory requirement. In case , you think that there will be bad debts during the year, provide the provision for bad debts. Otherwise, not required.
01 June 2010
well practically provision on Bad debts is never made....practicaly while preparing balancesheet it is not done.. If you think its a bad debts than charge it to BD this year or next year....
01 June 2010
As per my knowledge, business establishment write off bad debts after 3rd year from the date of billing, - at the time of Income Tax Scrunity, Officers asked the details and on what basis v provide bad debts etc., Instead of debit bad debts, debit Discount Allowed Account, it would not catch the Officer's eye more.
CAclubindia
