What is the necessity for bad debt provision to exist?

Prepare sensibly for the economic crisis.

The provision for bad debts refers to the provision for accounts receivable, and the accounts receivable that cannot be recovered are used to offset them, which is the allowance account for accounts receivable.

Taxpayers who can withdraw bad debt reserves, unless otherwise specified, shall not exceed 5 of the balance of accounts receivable at the end of the year.

The provision for bad debts can be calculated using the following formula:

Provision for bad debts to be withdrawn in the current period = Amount of provision for bad debts payable in the current period based on accounts receivable - Credit balance of the "Provision for Bad Debts" account.

Bad debt provision refers to the provision of accounts receivable (including accounts receivable, other receivables, etc.) of an enterprise, which is a provision account. Enterprises use the allowance method for the accounting of bad debt losses. Under the allowance method, the enterprise should estimate the bad debt loss at the end of each period and set up a "bad debt provision" account.

The allowance method refers to the use of a certain method to estimate the loss of bad debts on a regular basis (at least at the end of each year), withdraw the provision for bad debts and transfer them to current expenses; When bad debts actually occur, it is a treatment method to directly write off the provision for bad debts that have been accrued and at the same time resell the corresponding balance of accounts receivable.

The high development of commercial credit is one of the important characteristics of the market economy. The development of commercial credit will inevitably lead to the occurrence of bad debts while bringing an increase in sales revenue to the enterprise. Bad debts are receivables that cannot be recovered or have little chance of being recovered.

Bad debt losses are losses that arise as a result of the actual occurrence of bad debts.

Summary. Dear, your good and bad debt provision refers to the provision of accounts receivable (including accounts receivable, other receivables, etc.) of the enterprise, which is a reserve account. A contra account is an account that is used to offset the balance of the adjusted account to obtain the actual balance of the adjusted account.

Please explain what the provision for bad debts looks like and for what purpose.

Relatives and hands, your good and bad debt provision refers to the enterprise's receivables (including accounts receivable, its family and other receivables, etc.) accrued, is a reserve account. A contra account is an account that is used to offset the balance of the adjusted account in order to obtain the actual balance of the adjusted account.

Due to the great uncertainty of the market economy, the accounts receivable of the enterprise are likely to not be fully recovered in the end, that is, some or all of the bad base lease accounts may occur. The so-called bad debts refer to accounts receivable that cannot be recovered.

To put it simply, the provision for bad debts is an expense that is recorded in advance in order not to greatly affect the company's profit and loss when bad debts occur.

Please explain what the provision for bad debts looks like and for what purpose.

Provision for bad debts: Provision for bad debts refers to the provision of accounts receivable (including accounts receivable, other receivables, etc.) of an enterprise, which is a provision account. Enterprises use the allowance method for the accounting of bad debt losses.

Under the allowance method, the enterprise should estimate the bad debt loss at the end of each period and set up a "bad debt provision" account. The allowance method refers to the use of a certain method to estimate the loss of bad debts on a regular basis (at least at the end of each year), withdraw the provision for bad debts and transfer them to current expenses; When bad debts actually occur, it is a treatment method to reduce the provision for bad debts and at the same time resell the corresponding balance of accounts receivable. You are good at the Chirono Bureau, and I am glad that for you this question What is the formula for preparing for the calculation of bad debts?

Bad debt provision is the allowance account for accounts receivable, which estimates the possible bad debt losses at the end of the period to form a reserve bad debt provision, which is included in the current profit or loss, and the accounts receivable are offset with the reserve when bad debts occur. Bad debt provision formula: bad debt provision to be withdrawn in the current period = amount of bad debt provision to be withdrawn according to accounts receivable in the current period - credit balance of bad debt provision account.

After reading a few answers, I think it's still a bit of a problem, and this matter has a big impact on the balancing of the three tables when we value modeling.

1. Assuming that the provision for bad debts of 100 yuan is made, then the asset party should reduce it by 100 yuan first;

2. An asset impairment loss (expense) of 100 yuan is incurred in the income statement, but! The impact on net profit is only $75, mainly because the expenses incurred are tax deductible (income tax expense), assuming a tax rate of 25%;

3. However, because this part is for the realization of profit and loss, the tax payable (income tax payable, real gold ** handed over to the tax bureau) will not be reduced, so there is a deferred income tax asset of 25 yuan, as a result, the asset side increases and decreases, which is equivalent to a decrease of 75 yuan;

4. As I just mentioned, the net profit actually decreased by 75 yuan, so the retained earnings part also decreased by 75 yuan, so the balance sheet is still flat.

5. Because all the items mentioned above are non-cash accounts, they have no direct impact on the cash flow statement, but when adjusting the net profit to the cash flow of operating activities, it is necessary to add an asset impairment loss of 100 yuan and minus the increase in deferred income tax assets of 25 yuan, so it is increased by 75 yuan.

If there is something incorrect, please criticize and correct the big guys and learn from each other!

Bad debt provision refers to the provision of accounts receivable of the enterprise, which is an allowance account. Enterprises use the allowance method for the accounting of bad debt losses. Under the allowance method, the enterprise should estimate the bad debt loss at the end of each period and set up a "bad debt provision" account.

The allowance method refers to the use of a certain method to estimate bad debt losses on a regular basis, withdraw bad debt provisions and transfer them to current expenses; When bad debts actually occur, it is a treatment method to directly write off the provision for bad debts that have been accrued and at the same time resell the corresponding balance of accounts receivable.

The enterprise sets up the "bad debt provision" accounting account to account for the bad debt provision withdrawn by the enterprise. Enterprises should conduct a comprehensive inspection of the receivables on a regular basis or at least at the end of each year, and make provision for bad debts that may occur in anticipation of the possible occurrence of various receivables, and for the receivables that are not sure to be recovered, provision for bad debts should be made.

Accounts receivable that cannot be recovered or are unlikely to be recovered should be treated as bad debt losses. To deal with bad debt losses using the allowance method, it is necessary to draw a bad debt provision.

Recognition of bad debts includes:

1) The debtor has been declared bankrupt or revoked in accordance with the law, and its remaining property is indeed insufficient to pay off the accounts receivable;

2) Accounts receivable in which the debtor dies or is declared dead or missing in accordance with law, and its property or estate is indeed insufficient to pay off;

3) Accounts receivable that the debtor suffers from a major natural disaster or accident and suffers huge losses, and its property (including insurance compensation, etc.) is truly unable to pay off;

4) Accounts receivable that the debtor fails to perform its debt repayment obligations within the time limit and cannot be repaid after a court ruling;

5) Accounts receivable that have not been collected for more than 3 years;

6) Accounts receivable approved by the State Administration of Taxation. Taxpayers shall not draw bad debt reserves for receivables arising from non-purchase and sale activities and any current accounts between related parties. Accounts between related parties shall also not be recognized as bad debts.

Bad debt provision is the provision for bad debts drawn by an enterprise for prepayments receivable such as notes receivable, accounts receivable, prepaid accounts, other receivables, long-term receivables, etc., which are expected to be unrecoverable. The method of making provision for bad debts shall be reasonably estimated by the enterprise based on historical experience, the financial situation of the debtor unit and relevant information, and the catalogue and withdrawal ratio shall be approved and implemented by the board of directors of the enterprise. When an enterprise withdraws a provision for bad debts, the "Asset Impairment Loss" account is debited and the "Bad Debt Provision" account is credited.

If the provision for bad debts to be withdrawn in the current period is greater than its book balance, it shall be withdrawn according to its difference; The difference between the amount payable and the book balance is debited to the "Bad Debt Provision" account and credited to the "Asset Impairment Loss" account.