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Dear sir,
Why do we only account for the increase or decrease in provision for doubtful debts from period on period?? When the provision is computed on the year end receiveables? Like it shows the receiveables who may turn into bad debts in a particular period?so y not to show the whole amount of provision in income statement??You really need to watch the free lecture to fully understand.
Basically the allowance for receivables (we stopped calling it a provision several years ago) at the start of the year is no longer needed and needs removing. A new allowance is needed at the end of the year and needs creating. Rather than do the two separate things (which is fine if you want to) it is quicker and easier just to make an entry to change it from what it was to what we now want.
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