Bad Debt Overview

A bad debt is an amount owed that is written off as a loss. It is classified as an expense because the debt cannot be collected and all reasonable efforts to collect it have been exhausted. This usually occurs when the debtor has declared bankruptcy or the cost of pursuing further action in an attempt to collect the debt exceeds the debt itself.

Writing off bad debt reduces your accounts receivable balance and gives you an accurate estimate of the payments your company expects to receive. The write-off incurs an expense for the amount of the unpaid debt.

For more information about writing off bad debt, see the following topics:

Related Topics

Journal Entries
Journal Entries Overview
Journal Entry Preferences
Making Journal Entries
Journal Entry Approval Overview
Reversing Journal Entries
Viewing Journal Entries
Printing Journal Entries
Importing a Journal Entry
Journal Entries in OneWorld
Writing Off Customer Overpayments
Expense Allocation Overview
Period End Journal Entries
Balancing Segments and Journals

General Notices