Discount allowed to Debtors is called as Bad debts.

Question

State whether the following statements are True or False with reasons:

Discount allowed to Debtors is called as Bad debts.

Answer 1

This statement is False.

Discount allowed to Debtors is an expense for the business while Bad debts mean irrecoverable amount from debtors and is a loss to the business. Thus, both have different meanings so, we cannot say that discount allowed to debtors is called as Bad debt.