Question

Mr. Nath who owed us 50,000 became insolvent and paid only
40% of this amount. What is term used for the amount not received
and in which side of Profit and loss Account this amount is shown?​

Answer 1

Answer:

Bad debt is the name and shown on debit side of profit and loss account because it's an expense

Answer 2

The term used is Bad debts an bad debts are expense of the business so it appears in the debit size of the business.

Lets understand it in detail

Explanation:

1. In this situation Mr. Nath is the debtor of the business and he has become insolvent which means that he is bankrupt and unable to pay all his liabilities. In this case out of debt of  50,000 he can pay only 40 % which means he can pay only 20,000 and remaining 30,000 which he cannot pay is called  bad debts .

2. Secondly this Bad debt will appear on the debit side of the Profit and  Loss Account, as bad debt is loss of the business. All losses or expenses  are debited in the books of accounts.