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why provision for doubtful debt is created

Asked by sntshtrk530 6th November 2017, 8:07 PM
Answered by Expert
Doubtful debt is the type of debt where the debt collection is not certain. It is estimated based on trend of collecting the debt from debtors. It is assumed that certain percentage of the debtors may default ato make payment at the stipulated time period. So it is necessary to make sufficient provision for such doubtful debts for true ascertainment of profit or loss. 
Answered by Expert 7th November 2017, 9:53 AM
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