Book
Keeping - 5 marks question asked in 1983
& 2004
Differences
between
|
Bad debts
|
Doubtful debts
|
|
1.
There is no possibility that a money will be collected from the Debtors.
|
1.
There is a possibility that the money will be collect from Debtors.
|
|
2.
Bad debt has a direct relation with the doubtful debt because when the
possibility to collect money ends, a bad debt occurs.
|
2.
Doubtful debt doesn’t depend on the bad debt.
|
|
3.
A bad debt is written off and it is accounted as an expense in the Profit and
Loss account duly deduct from Sundry Debtors in the Balance Sheet or adjust
in the Provision for Bad and Doubtful Debts.
|
3.
As a precaution, Company creats a Provision/ Reserve (certain percentage of
Total debtors value) by debited to Profit and Loss Account and deduct the
Same from Sundry Debtors. Here it is
not an expense, but as a Reserve.
|
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