Bad and Doubtful debts Flashcards
1
Q
What is a bad debt?
A
A debt which is considered to be uncollectable
2
Q
Bad debts written off
A
Means you reduce trade receivables and the expenses increases
3
Q
What is a doubtful debt?
A
A doubtful debt is is an amount owing to the business where there is some doubt in its collectability.
note: even though there is doubt of the money being paid, its still in the debtors account.
4
Q
Specific (name)*doubtful debts
A
when a named debtor is in financial difficulty and cant pay their debts.
5
Q
Doubtful debts : step 1
A
Recognize bad and doubtful debts.
6
Q
Doubtful debts : part 2
A
Recognize doubtful debts using
trade receivables - bad debts * provisional percentage
