PA- provision of bad debt(urgent)

For bad debts, it must be expense , because when you transfer the total amount of bad debts to P&L, the accounting entries is like this:
Dr P&L
-----Cr Bad debts
Then consider the accounting equation: A = C + L
When A decreases, C decreases as well. Since capital is on credit side, so a debit means a decrease in capital and hence it is an expense.
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For provision of bad debts ( Pfbd ), if there is an increase, it is an expense but if there is a decrease, it is a revenue.
For Pfbd, the accounting entries is like this:
Dr P&L
-----Cr Pfbd [net debtors balance x % of Pfbd ]
Then for an increase in Pfbd, the accounting entries are the same as above but the figure will be the Pfbd increased, i.e.
Dr P&L
----Cr Pfbd (increase)
[Net debtors balance x % Pfbd - opening balance of Pfbd ]
The in P&L, it will appear as follows:
Trading and Profit and Loss Account for the year ended 31-12-2007 (extracted )
Less: Expenses
Bad debts
Provision for bad debts ( increase )
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Next for a decrease in Pfbd, the accounting entries will be like that:
Dr Pfbd
-----Cr P&L
By similar deduction based on A = C + L, you know it is a revenue in P&L, then:
Trading and Profit and Loss Account for the year ended 31-12-2007 ( extracted )
Add: Revenues
Provision for bad debts ( decrease )
Less: Expenses
Bad debts

if there is an increase in provision of bad debt, it will be considered as expense

2007-10-01 13:26:59 補充：
i mean the increase will be considered =]

2007-10-01 19:06:32 補充：
bad debt會計做expense的唔記得答= ="