Can anybody tell me difference between Provision for bad debts & Provision for doubtful debts
12 Replies
RAKESH
(Almost CA)
(2199 Points)
Replied 08 October 2011
Both are same. when u feel that the debts are doubtful then u create a provision . If the bad debts are confirmed then write off the bad debts.
Bhaskar Unnikrishnan CPA CMA
(Accounts / Administration)
(414 Points)
Replied 09 October 2011
Usually it says, provision for bad and doubtful debt...
Swapnil Jain
(Finance - FP&A)
(564 Points)
Replied 09 October 2011
both are same !!! a provision for debt that one feels is irrecoverable or partly recoverable....
Rahul Suneja
(CA-Final, CS-Exec)
(215 Points)
Replied 09 October 2011
Both are one and the same thing
CA Goutam Sharma
(Chartered Accountant in Practice)
(468 Points)
Replied 09 October 2011
I agree with Bhaskar, Both the terms are generally spoken, Otherwise the specific term should Provision for bad &doubtful debts.
Provision is not created on bad debts, instead, they are written off straight.
Ofcourse that can be routed through Provision too
Rohit Arora
(IPCC, b.com(h))
(190 Points)
Replied 09 October 2011
both are simillar,
in the case of credit sale some debtor are good or some bad then bad debtor may give money it means those are doutfull debt nd futher balance bad debtor may not give so those are declared bad..thats y we make prov. for both
preeti parihar
(student)
(32 Points)
Replied 10 October 2011
both are same....provision is created for doubtful debts....there is no use of creating provision for the debts which are already bad.......jus written off ......it is usually called as provision for bad and doubtful debts
Rahul
(Chartered Accountnat CS)
(1585 Points)
Replied 10 October 2011
Thank u all
But I am having 1 doubt still left
Suppose A Ltd closes its accounts on 31st march and on 10th april a bad debt arise and the acccounts are approved (in board meeting) on 20th april.
Now, i think as per AS-4 they will have to create a Provision for BAD debts rather than doubtfull
And the difference lies here,
What say?????????
ACCOUNTANT
(Student)
(559 Points)
Replied 10 October 2011
When those bad debts pertain to that particular period it would be reasonable to write off such to the respective p&l a/c as mere bad debts..
But since those were given the confirmation of being bad on some date after the completion of financial yr.
and they are clearly bad but not doubtful regarding payment anymore.....
It would be prudent to make a provision for such debt as being bad..
Hope i gave an apt soln...
CA NEERAJ SHARMA
(practice)
(408 Points)
Replied 10 October 2011
HI Rahul
Bad Debts and Doubtful Debts r Not the SAme Thing...
Although In schools u learn they r same..
Doutful debtss- it means the money which may or may not be recived in future(means doubtfull)
Bad Debts- It means when u are sure tht now u will not gonna to recieve money in future.. (i.e.-money lost)
Treatment- we make provsions only for doutfull debts but not for the bad debts bcz bad debts r our loss n show inthe profit and loss account..
bcz as per prudent we make provision for seen future liabilty
Sanjeev Parasrampuria
(B.Com CA Final CS Final)
(273 Points)
Replied 11 October 2011
I AGREE WITH "NEERAJ SHARMA"...................It is 100% right answer.
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