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Provision for doubtful debts account is which type of account real personal or nominal ?
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Provision for Doubtful Debts Account:
- Type: Nominal Account
- Explanation:
- Type: Nominal Account
- Explanation:
The provision for doubtful debts account is a nominal account. Nominal accounts are those accounts that are related to expenses, losses, incomes, or gains. They are created to record the income and expenses of a business organization. Provision for doubtful debts account is opened to keep a record of the estimated losses that might arise from the debts that are doubtful or may not be recovered. The provision is made in anticipation of the losses that might occur in the future.
The amount of the provision is calculated based on the percentage of the total outstanding debts or the past experience of the organization in terms of the percentage of debts that are not recovered. This provision is created to ensure that the financial statements of the organization reflect the true financial position of the organization. The amount of the provision is deducted from the total amount of the accounts receivable to arrive at the net amount of the accounts receivable that is expected to be collected.
In conclusion, the provision for doubtful debts account is a nominal account that is created to record the estimated losses that might arise from the doubtful debts. It is created to ensure that the financial statements of the organization reflect the true financial position of the organization.
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Provision for doubtful debts account is which type of account real personal or nominal ?
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Provision for doubtful debts account is which type of account real personal or nominal ? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Provision for doubtful debts account is which type of account real personal or nominal ? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Provision for doubtful debts account is which type of account real personal or nominal ?.
Provision for doubtful debts account is which type of account real personal or nominal ? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about Provision for doubtful debts account is which type of account real personal or nominal ? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Provision for doubtful debts account is which type of account real personal or nominal ?.
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