bad debt

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Bad debt

A debt that is written off and deemed uncollectible.

Bad Debt

Debt from a credit sale that the creditor is unable to collect. Debt becomes bad debt when the creditor has made all reasonable efforts to collect the debt but has been unable to do so. Often, this occurs when the debtor declares bankruptcy or when pursuing collection attempts further will cost more than the debt itself. A company writes off bad debt as an expense, which reduces its taxable income. However, it also deprives the company of cash flow that is ultimately necessary to keep it in business.

bad debt

an accounting term for money owed to a company by customers or borrowers which is highly unlikely to be paid because, for example, a customer has become insolvent (see INSOLVENCY). Such bad debts are written off against the PROFITS of the trading period as a business cost. See CREDIT CONTROL, DEBTORS RATIO, DOUBTFUL DEBTS.

bad debt

an accounting term for money owed that is unlikely to be paid because, for example, a customer has become insolvent (see INSOLVENCY). Such bad debts are written off against the PROFITS of the trading period as a business cost. See CREDIT CONTROL.
References in periodicals archive ?
The account may be placed into uncollectible status until the financial status of the church improves.
Often only a handful of cashiers is responsible for accepting the majority of a firm's uncollectible checks.
a calendar-year taxpayer, established a $100,000 allowance for uncollectible accounts receivable (bad debt reserve).
Even if it decides to do so, it is expected to take over only a small portion of the claims, making most of them uncollectible.
448(d)(5)(C) to issue regulations permitting taxpayers to determine uncollectible amounts using alternative computations or formulas, including safe harbors that, based on experience, accurately reflect the income the taxpayer will not collect.
The director said the IRS needs to reexamine the accounts deemed uncollectible and criticized the IRS's classification methods, under which high-income individuals often are allowed to escape paying back taxes even though they continue to pay high living expenses.
If Norman loans the money directly to Constabulary and the debt becomes uncollectible, he should be entitled to rely on the Butler decision and the IRS's acquiescence to claim a business bad debt loss.
A breach of contract action by a subcontractor against the general contractor for money damages may result in an uncollectible judgment.
In 1985 Peat discovered 30% of Top Brass's accounts receivable were uncollectible.