9. Bad debts Flashcards
(9 cards)
1
Q
Debtors
A
Owe money to a business
2
Q
Abscond
A
Run off, not paid
3
Q
Where are trade receivables recorded on statement of financial position
A
Current Assets
4
Q
Examples of receivables as current assets
A
Trade Receivables
Loans to other enterprises
Refunds
5
Q
Bad debts
A
Know that debts won’t be paid
6
Q
Doubtful debts
A
Additional Adjustments against debts may not be paid
- past experience, industry average
7
Q
How to record non payments in Income Statement
A
Amount owed as an expense
Debit bad debt expense
8
Q
How to record non payments in Statement of Financial Positioning
A
Reduce value of receivables
Credit trade receivables
9
Q
Provisions for doubtful debts
A
- Times net receivables balance after discounts and specific bad debts deducted
- Compare allowance to previous year
- Only difference is charged to income statement
