Debtors 'balance is considered one of the most important asset accounts in commercial companies, and this...

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Accounting

Debtors 'balance is considered one of the most important assetaccounts in commercial companies, and this balance is shown in thebudget after deducting part of the balance in order to meet thepossibility of not collecting any of the debtors' accounts, andthat is through an estimate dedicated to doubtful debts, and theaccountant may rely on several methods to calculate and estimatethem, as well as It takes into account the bad debts, what is thebest method in evaluating debtors, the direct write-off method orthe provisions method? Why? Explain

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There are 2 ways to account for bad debt expense The fundamental difference between the 2 methods is in timing difference of bad debts expense recognition and accounting principles applied for accounting bad debt expense Hence both methods are not same and the recommended method for accounting is allowance method A direct method of write off is not in accordance with conceptual framework for financial reporting as explained below Direct See Answer

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Debtors 'balance is considered one of the most important assetaccounts in commercial companies, and this balance is shown in thebudget after deducting part of the balance in order to meet thepossibility of not collecting any of the debtors' accounts, andthat is through an estimate dedicated to doubtful debts, and theaccountant may rely on several methods to calculate and estimatethem, as well as It takes into account the bad debts, what is thebest method in evaluating debtors, the direct write-off method orthe provisions method? Why? Explain