When provision is made for doubtful doubt, the accounting entries are

When provision is made for doubtful debts, the accounting entries are: Debit: Profit and Loss Account Credit: Provision for Doubtful Debts Account This is because the provision for doubtful debts is a provision made by the business to cover the possibility of some of its debtors defaulting on their payments. The provision is an estimated amount of bad debts that the business expects to incur in the future. As such, it is charged as an expense to the profit and loss account, which reduces the profit for the year. On the other hand, the credit entry is made to the provision for doubtful debts account, which is a balance sheet account. This means that it represents a liability of the business, which will be set aside to cover the expected bad debts.