What Is Allowance For Doubtful Accounts - Definition - Meaning - Calculation - Explanation
It is an Estimation either o n Sales (Income Statement-Approach) or on Accounts Receivable (Bala nce Sheet-Approach) that some percentage of Accounts Receivable / Debtors or Sales may not be recovered from our customers in future. For More Details, You Ca n Study, " How To Write Off An Uncollectible Accounts Receivable ". It is also called Provision for Doubtful Debts or Reserve For Doubtful Debts under British Accounting System. Do You K now What Kind / Type of Account is Allowance For Doubtful Accounts? It is a Contra Asset Account which is deducted from the Closing Balance of Accounts Receivable on Balance Sheet . How To Calculate Allowance For Doubtful Accounts Or Estimated Bad Debts Expe nse / Doubtful Debts? For Example, if we sold goods to our Customers for Rs. 60000 on Credit Basis, then there are possibilities that some percentage of unpaid amount may not be recovered from Accounts Receivable, so as a precautiona...