The economic nature of provision for doubtful debts

This article deals with determination of economical nature of provision for doubtful debts that forming in financial accounting and tax accounting. The object of research is provision for doubtful debts. The field of research is financial accounting and tax accounting. Methods are used for research are: analysis, synthesis, deduction, induction, formalization, abstraction. The main result of research is determination of economical nature of provision for doubtful debts. The basic conclusion in financial accounting is that provision for doubtful debts is virtual thing and it does not have anything about real processes and resources, and it has the dual nature. On the one hand, the nature is the measurement of potential financial loses due from default of counteragent's obligations. On the other hand, the forming of provision allows calculating the amount of accounts receivable that could be collected. The provision's economical nature as activity indicator is the characteristic of the risk management condition in part of default of counteragent's obligations risk. The recognition of provision for doubtful debts in tax accounting and it recognition as cost is the compensation that is given of state because of defects in payment system and law-enforcement system exist. These defects result unpunishable default of obligations. The problem of need for forming provision and its reasons are discovered. The scientific innovation of research is determination of economical nature in tax accounting. The practical significance and the value of the research results are that on the basis of clear understanding of provision nature made possible the proper qualification of this object by accounting staff.