BMC Associates says Replied on 12th September,2026 04:10 PM
Yes, making a provision for bad debts is generally an accounting estimate, not an accounting policy.
A provision for bad debts involves estimating the amount of receivables that may not be recovered based on factors such as past experience, customer creditworthiness, ageing of receivables, and current circumstances. Therefore, changes in the assumptions or estimation method can result in a change in accounting estimate.
An accounting policy, on the other hand, refers to the principles and methods used to prepare financial statements, such as the policy for recognising revenue or valuing inventory.
So, in simple terms: Bad debt provision = Accounting Estimate.
This is also a common area where businesses seek guidance from chartered accountant firms in gurgaon, a chartered accountant gurgaon, a ca firm in gurgaon, or a ca in gurgaon.
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BMC Associates says Replied on 12th September,2026 04:10 PM
Yes, making a provision for bad debts is generally an accounting estimate, not an accounting policy. A provision for bad debts involves estimating the amount of receivables that may not be recovered based on factors such as past experience, customer creditworthiness, ageing of receivables, and current circumstances. Therefore, changes in the assumptions or estimation method can result in a change in accounting estimate. An accounting policy, on the other hand, refers to the principles and methods used to prepare financial statements, such as the policy for recognising revenue or valuing inventory. So, in simple terms: Bad debt provision = Accounting Estimate. This is also a common area where businesses seek guidance from chartered accountant firms in gurgaon, a chartered accountant gurgaon, a ca firm in gurgaon, or a ca in gurgaon.
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