What Is The Difference Between Provision For Bad Debt And Reserve For Doubtful Debts And Their Accounting Implications? Please Answer This Query Because It Creates Confusion

Provision for bad debt, reserve for doubtful debts or allowance for doubtful accounts are all the same. It's a contra account created for accounts receivable that is due but not yet paid. If the receivable has been long overdue, it may be written off, depending on company's policies how long before receivables could be written off.

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Provision for bad n doubtful debts and reserve for doubtful debts are all same. Accounting implications is if there is an increase in the provision for bad debts then we show it in the debit side of the P/L account and vice versa. This amount of provision is then deducted in the Balance Sheet from the debtors.

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