accounting question3

1) Mainly due to the accural/matching concept. Using the provision method, an estimated amount would be charge to profit and loss account as provision for bad debts. Such expenses 'match' the revenue arise during the same financial year.

However, under direct write off method, expenses would only incur and record when it really happen. It is likely that part of this year expenses is related to the prior years' revenue. So such expense doesn't match the current revenue during the period.

2) Accured expense is that expenses incurred but we dun pay it yet at the year end date.

It is probably that we have to pay such expenses within 12 months. So there would be an outflow of economic benefits from the enitity. So accured expense is the current liability.

The journal entries:
Dr. Expense
Cr. Accured expense