Paper 2 · June 2015 · bad and doubtful debts

How does the accounting treatment of a bad debt differ from that of a doubtful debt?

AA doubtful debt is written off the customer's account

BA bad debt is written off the customer's account

CA bad debt leaves the customer's account untouched

DA doubtful debt is charged in full to the income statement

Explanation

A bad debt is known to be lost, so the customer's account is credited and the bad debts account is debited. A doubtful debt may still be paid, so no customer's account is touched: only a provision is created or adjusted, and just the change in that provision reaches the income statement.

Derived from ZIMSEC Accounting 9197/2 Paper 2, June 2015, Q1

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