Accounting (AS)·Bad debts & provision for doubtful debts · NSSCAS 2.1.3
Provision for doubtful debts
Narrated lesson · press play
Some customers will probably never pay - but which ones? The provision for doubtful debts is the careful estimate a business makes for that risk, and it appears somewhere in almost every Paper 1 final-accounts question. In this lesson you learn to create, increase and decrease the provision, run the ledger account across three years, and show the net trade receivables in the statement of financial position.
What you'll learn in this lesson
By the end you should be able to (NSSCAS Accounting (AS) 2.1.3):
- record provision for doubtful debts in the general ledger
- prepare an income statement including bad debts and the adjustment of provision for doubtful debts
- prepare a statement of financial position including provision for doubtful debts
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