The amount that the firm has not been able to realise from its debtors is called:
Answer & explanation
Correct answer: option 2
The correct answer is option 2- Bad debts.
Bad debts refer to the amount that the firm has not been able to realise from its debtors. It is regarded as a loss and is termed as bad debt. The entry for recording bad debt is: Bad debts A/c Dr. To Debtors A/c.