You are the accountant of ABS Ltd and is aware that the company is experiencing a high level of bad debts. It has been revealed to you that no provision for bad and doubtful debts have been in place over the years. Use the appropriate accounting principle to explain to the management of ABS Ltd the nature of this provision and the impact that its absence will have on the financial performance of the business.

Please present n in-depth discussion of the topic . Please provide in text citations and references to support your answer. Also length of post should be at least 200 words.