This mind map is about Bad debt & Provision for doubtful debt. Start to use a mind map to express and organize your ideas and knowledge right now.
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Bad debt & Provision for doubtful debt
Dr: Bad debt xx
Cr: Debtors xx
Bad debt :
Bad debts:
Net profit will decrease as expense increases. Net debtordecreases as there is a decrease of the amount of debts thatare unrecoverable.
Effect of bad debts, recovery of bad debts and provision ondoubtful debts on net profit and net debtors in the BalanceSheet:
The allowance for doubtful debt reduces the recievablebalance to the amount that the entity prudently estimatesto recover in the future.
Why do we need to have provision fordoubtful debt?
Bad debt is an account receivable that has been clearlyidentified as not being collectible. Doubtful debt is an accountreceivable that might become a bad debt at some point in thefuture.
Difference between bad debts anddoubtful debts:
Fraud
Trade dispute
Cr: Balance sheet xx
Doubtful debt:
Dr: Doubtful debt xx
Customers going bankrupt
Reasons for incurring bad debts:
Bad debt and Provision for doubtful debt
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Bad debt & Provision for doubtful debt
Dr: Bad debt xx
Cr: Debtors xx
Bad debt :
Bad debts:
Net profit will decrease as expense increases. Net debtor
decreases as there is a decrease of the amount of debts that
are unrecoverable.
Effect of bad debts, recovery of bad debts and provision on
doubtful debts on net profit and net debtors in the Balance
Sheet:
The allowance for doubtful debt reduces the recievable
balance to the amount that the entity prudently estimates
to recover in the future.
Why do we need to have provision for
doubtful debt?
Bad debt is an account receivable that has been clearly
identified as not being collectible. Doubtful debt is an account
receivable that might become a bad debt at some point in the
future.
Difference between bad debts and
doubtful debts:
Fraud
Trade dispute
Cr: Balance sheet xx
Doubtful debt:
Dr: Doubtful debt xx
Customers going bankrupt
Reasons for incurring bad debts:
Bad debt & Provision for doubtful debt
Dr: Bad debt xx
Cr: Debtors xx
Bad debt :
Bad debts:
Net profit will decrease as expense increases. Net debtordecreases as there is a decrease of the amount of debts thatare unrecoverable.
Effect of bad debts, recovery of bad debts and provision ondoubtful debts on net profit and net debtors in the BalanceSheet:
The allowance for doubtful debt reduces the recievablebalance to the amount that the entity prudently estimatesto recover in the future.
Why do we need to have provision fordoubtful debt?
Bad debt is an account receivable that has been clearlyidentified as not being collectible. Doubtful debt is an accountreceivable that might become a bad debt at some point in thefuture.
Difference between bad debts anddoubtful debts:
Fraud
Trade dispute
Cr: Balance sheet xx
Doubtful debt:
Dr: Doubtful debt xx
Customers going bankrupt
Reasons for incurring bad debts:
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This work was published by MindMaster user Captain O Captain and does not represent the position of Edraw Software.