Accounting Interview Question:

What are the four classifications of Bad and Doubtful Debts as per the context of the Bank?

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Assets in Banks are Loans and Advances given to borrowers. These Assets are divided into 4 categories. They are

1. Standard Assets: These accounts are good and the borrower is repaying the loan as per stipulation and the security extended in good.
2. Substandard Asset: These accounts are good as per the security extended is good but the loans repayment is not up to the mark.
3. Doubtful Asset: These accounts have both the security as well the repayment stipulation in irregular method.
4. Bad Asset: These accounts are where the repayment is not forthcoming and the security extended becomes bad.
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