Question

What preparation final account why do you create bad debts provision for bad and doubt full debts provision for discount debtors give reason?

Answer 1

1. Bad debt provision
Bad debt provision is created in final accounts to meet the losses of the debtors.
For example
Business sold a product to a customer (debtor) of RS 100 on credit. If the business man find that there is no chances of getting 100rs again. So in that context bad debts provision are created.

Answer 2

we don't know how many bad debt will happen in the coming  period , that's why we create  its provision.

i.e; that there is 15% chances that our debtor will not be recovered..