Can anyone tell why the provision for bad debts includes the profit and loss account as the balancing figure.whats the use of this?

Question

Manju · Answer

But we already record the bad debts and provision for bad debts in the p and l account .but the balancing figure is confusing

Laya · Answer

First, it will be shown in the Dr. side of the Profit & Loss A/c. Second, amount of Provision for Bad & Doubtful Debts will be deducted from the Debtors in the Assets side of the Balance Sheet. In order to record the number of bad debts correctly, such sum is charged to the profit and loss account and deducted from the value of debtors for that year, so that the amount represents money that is actually expected to accrue from the debtors.

Can anyone tell why the provision for bad debts includes the profit and loss account as the balancing figure.whats the use of this?

2 answers

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