The provision for bad debts might refer to the balance sheet account also known as the Allowance for Bad Debts, Allowance for Doubtful Accounts, or Allowance for Uncollectible Accounts. In this case Provision for Bad Debts is a contra asset account (an asset account with a credit balance). It is used along with the account Accounts Receivable in order to report the net realizable value of the accounts receivable.

Provision for Bad Debts might also be an the income statement account also known as Bad Debt Expense or Uncollectible Account Expense. In this situation, the Provision for Bad Debts reports the credit losses that pertain to the period shown on the income statement.

Gain unlimited access to our bookkeeping seminar videos, bookkeeping proficiency exams (and answers), bookkeeping cheat sheet, visual tutorials, and more—all designed to help you master valuable bookkeeping skills. Learn more about AccountingCoach PRO.