Book debts or Debtor indicates the amount recoverable from the customer, but in practice it is applied to a wide range of claims which a business may carry as an asset in its books.

The following are some of the indications of doubtful and uncollectible debts, loans and advances:

(i) The terms of credit have been repeatedly ignored.

(ii) There is stagnation or lack of healthy turnover in the account.

(iii) Payments are being received but the balance is continuously increasing.

(iv) Payments though being received regularly, are quite small in relation to the total outstanding balance.

(v) An old bill has been partly paid (or not paid), while later bills have been fully settled.

(vi) The cheques received from the trade receivables have been repeatedly dishonoured.

(vii) The debt is under litigation, arbitration, or dispute.

(viii) The auditor becomes aware of unwillingness or inability of the trade receivable to pay the dues.

(ix) Amounts due from employees, which have not been repaid on termination of employment.

(x) Collection is barred by statute of limitation.