Provision for bad and doubtful debts is created in anticipation of actual bad debts on the basis of:

Question

Quizplus · Accepted Answer

The Conservatism Concept in accounting suggests that potential expenses and liabilities should be recognized and recorded when they are probable, while potential revenues should only be recognized when they are assured. This concept guides the creation of provisions for bad and doubtful debts to anticipate and account for potential losses from debts that may not be recoverable.

Provision for Bad and Doubtful Debts Is Created in Anticipation