BACHELOR OF BUSINESS ADMINISTRATION

Detailed explanation-1: -Prudence or conservatism concept is followed by providing for discount on debtors and making provision for doubtful debts.

Detailed explanation-2: -No, provision for discount on debtors is made after making provision for doubtful debts from debtors.

Detailed explanation-3: -In other words, the amount of the provision for discount is calculated after deducting bad debts and provision for doubtful debts from sundry debtors. Suppose, sundry debtors total Rs. 20, 000; provision for doubtful debts is required at 5% and provision for discounts at 2 ½ %.

Detailed explanation-4: -Discount likely to be allowed to customers in an accounting year can be estimated and provided for by creating a provision for discount on debtors. Here, it is to be remembered that provision for discount is made on good debtors which are arrived at by deducting further bad debts and the provision for doubtful debts.