doubtful debt

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An amount owed to an organization by a debtor that it might well not receive. A provision for doubtful debts may be created, which may be based on specific debts or on the general assumption that a certain percentage of debtors’ amounts are doubtful. As the doubtful debt becomes a bad debt, it may be written off to the provision for doubtful debts or alternatively charged to the profit and loss account if there is no provision. See provision for bad debts.

Subjects: Accounting.

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