While working in a business, it may so happen that certain debts cannot be recovered after a certain point of time or from particular people. When debts cannot be recovered from the concerned sources, those are known as bad debtors and considering it as a loss for the company it is posted on debit side of profit and loss account.
Another category that needs to be taken into consideration is sundry debtors who are primarily small entities who owe a certain amount of money to the concerned company.
In case a company has fewer sundry debtors, so in the Balance Sheet, debtors would be shown their value. Since bad debts are present in Trial Balance, it is also presented on debit side of profit and loss account.
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- Adjustments additional information in preparation of final accounts
- Depreciation in the value of assets
- Appreciation in the value of assets
- Outstanding expenses
- Prepaid expenses
- Accrued or outstanding expenses
- Unearned income
- Interest on capital
- Interest on drawings
- Interest and dividend on investment
- Interest on loan
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