Provision for doubtful debts...

[noman]

hi...i need to ask one thing abt provisions..

there are two methods of doing questions..

1- we open separate accounts for "provision of doubtful debts" and for "bad debts".......we transfer the balance from both to P&L separately.

2-we open account for "prov. for doubt.. debts".....we transfer the bad debts to this account and then transfer the balance to P&L....

i have seen both the methods ..and in frankwood only the first method is mentioned.........but when i see solved past papers...in all those the second method has been used.....my cousin in mod.E also told me that second method is better...

what do u guyz suggest?? is the first one ok or not?

[noman]

oh sab icap ke wakeelo....kidher gai???
you ppl talk so much abt general topics like you are so much experts and stuff.........why can't you answer my question.....can't u do any thing actual instead of talking uselessly???

[Desert Sleet]

There is even one more method. As in first case we here also open 2 accounts 1 for provision of doubtful debts and the other for "bad debts" . But the entries are vice verca, we transfer the balance from Provison accounts to Bad Debts account and then by an adjusting entry to P/l a/c.

Each method is acceptable. I have always used this 3rd method.

__________________
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[noman]

our teacher uses this third method.....but i don't like it(personal matter)......i didn't see this any book also.........

[eShA]

hi

well i m not belong to icap ( not icap wakeel) but as business gradute i took several courses related to accouting n adv. accounting... and we always follow the 2nd method... well might be the reason is that both are the provision so we take both in same account

any further opinions n reason will b appreciated.

regard,,,,
from the best
and top of all
eShA


Although this may seem a paradox, all exact science is dominated
by the idea of approximation.