06 August 2011
provision of Bad debts is a sure loss, irrecoverable on a given date and is written off from the trade debtors. an over aged debtors usually turn out to be bad debtors.
provision for doubtful debts is created based on estimation that the certain percentage of debtors may turn out to be doubtful debts. a percentage is worked out based on the debtor's collection period and general economic environment.
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