Question

What is bad debt for the business, expense or loss?​

Answer 1

· Bad debt expense is an expense that a business incurs once ... sheet, which is also known as a provision for credit losses.

Answer 2

The bad debt expense appears in a line item in the income statement, within the operating expenses section in the lower half of the statement. As an example of the allowance method, ABC International records $1,000,000 of credit sales in the most recent month.

A bad-debt expense anticipates future losses, while a write-off is a bookkeeping maneuver that simply acknowledges that a loss has occurred.

Bad debt recovery is a payment received for a debt that was written off and considered uncollectible. ... Bad debts must be reported to the IRS as a loss. Bad debt recovery must be claimed as part of its gross income.

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