Question

Recovery of 50% ₹ 2,000 owed by haradhan, earlier written off as an irrecoverable dept

Answer 1

Answer:

When an account receivable is reasonably expected to be uncollectible, it is written off as bad debts expense in the period in which it becomes uncollectible. Since the write-off decision is based on judgment, it might turn out to be wrong. For example, cash might be received from a written-off account receivable when the customer’s financial situation improves or when its assets are liquidated to pay its debts, etc.

Explanation:

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