Commerce Exam  >  Commerce Videos  >  Additional Study Material for Commerce  >  02- Bad Debts and Adjustments

02- Bad Debts and Adjustments Video Lecture | Additional Study Material for Commerce

4 videos|168 docs

FAQs on 02- Bad Debts and Adjustments Video Lecture - Additional Study Material for Commerce

1. What are bad debts in commerce?
Ans. Bad debts in commerce refer to the unpaid or uncollectible debts owed by customers or clients to a business. These debts are considered as losses for the company as they are unlikely to be recovered.
2. How do bad debts affect a company's financial statements?
Ans. Bad debts have a negative impact on a company's financial statements. They reduce the accounts receivable and net income of the company, as well as increase the amount of bad debts expense and decrease the overall profitability.
3. How can a company account for bad debts?
Ans. A company can account for bad debts using the allowance method or the direct write-off method. The allowance method involves estimating and recording a specific amount as an allowance for bad debts, while the direct write-off method requires recognizing bad debts as they become uncollectible.
4. What is an adjustment related to bad debts?
Ans. An adjustment related to bad debts is a financial adjustment made by a company to reflect the estimated amount of bad debts at the end of an accounting period. This adjustment is necessary to ensure that the company's financial statements accurately represent the true financial position.
5. How does the adjustment for bad debts affect the income statement and balance sheet?
Ans. The adjustment for bad debts affects the income statement by increasing the bad debts expense, which reduces the net income. It also affects the balance sheet by reducing the accounts receivable and increasing the allowance for bad debts, which decreases the company's assets.
4 videos|168 docs

Up next

Explore Courses for Commerce exam
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
10M+ students study on EduRev
Download the FREE EduRev App
Track your progress, build streaks, highlight & save important lessons and more!
Related Searches

study material

,

Extra Questions

,

ppt

,

Sample Paper

,

MCQs

,

Free

,

past year papers

,

Semester Notes

,

mock tests for examination

,

Summary

,

pdf

,

Exam

,

02- Bad Debts and Adjustments Video Lecture | Additional Study Material for Commerce

,

Viva Questions

,

02- Bad Debts and Adjustments Video Lecture | Additional Study Material for Commerce

,

Important questions

,

shortcuts and tricks

,

02- Bad Debts and Adjustments Video Lecture | Additional Study Material for Commerce

,

Previous Year Questions with Solutions

,

practice quizzes

,

Objective type Questions

,

video lectures

;