Bad debt

A bad debt is a debt owed to a business that is not expected to be received. This may arise, for example, as a result of the insolvency of a customer who had been buying products on a credit basis. Bad debts are written off either as a charge to the profit and loss account or against an existing doubtful debt provision.

 

reference: Business Studies / Accounting. Accounts & Finance Glossary. Jim Riley BA(Hons) MBA FCA // tutor2u

Tags: