BACHELOR OF BUSINESS ADMINISTRATION

Detailed explanation-1: -The provision for doubtful debts is an estimated amount of bad debts that are likely to arise from the accounts receivable that have been given but not yet collected from the debtors. It is similar to the allowance for doubtful accounts.

Detailed explanation-2: -In order to receive payment faster from their customers, businessman provides a discount to those customers who pay before maturity of the debt. So, at the end of the year, we make provision for next year losses due to discount allowed. Thus, this provision will be known as provision for discount on debtors.

Detailed explanation-3: -The entry for creating provision for doubtful debts is debit and credit provision for doubtful debts account.

Detailed explanation-4: -The provision for doubtful debts, which is also referred to as the provision for bad debts or the provision for losses on accounts receivable, is an estimation of the amount of doubtful debt that will need to be written off during a given period.