Doubtful debts are those debts which a business or individual is unlikely to be ready to collect. the reasons for potential non-payment will include disputes over offer, delivery, the condition of item or the appearance of economic stress within a customer's operations. when such a dispute occurs it's prudent occurs this debt or portion therefrom to the uncertain debt reserve. this can be done to avoid over-stating the assets of the business as trade debtors are bad net of uncertain debt. when there is no longer any doubt that a debt is uncollectible, the debt becomes bad. associate degree example of a debt becoming uncollectible would be:- once final payments have been made of the liquidation of a customer's limited liability company, no any action can be taken.
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