Question

what is bad debts plz explain neatly
​

Answer 1

BAD DEPT IS AN EXPENSE THAT A BUSINESS INCURS ONCE THE REPAYMENT OF CREDIT PREVIOUSLY EXTENDED TO A CUSTOMER IS ESTIMATED TO BE UNCOLLECTIBLE .BAD DEPT IS CONTIGENCY  THAT MUST BE ACCOUNTED FOR BY ALL BUSINESS WHO EXTEND CRED TO CUSTOMERS , AS THERE IS ALWAYS A RISK THAT PAYMENT WIL NOT BE RECEIVED .

>>>>>>>

KEYTAKAWAYS :

• BAD DEPT EXPENCE IS AN UNFORTUNATE COST OF DOING BUSINESS WITH CUSTOMER ON CREDIT , AS THERE IS ALWAYS A DEFAULT RISK INHERANT TO EXTENDING CREDITS
• IN ORDER TO COMPLY WITH THE MATCHING PRINCIPAL , AD DEPT EXPENSE MUST BE ESTIMATED USING THE ALLOWENCE METHOD IN THE SAME PERIOD WHICH THE SALE OCCURS .
• THERE ARE TWO MAIN WAYS TO ESTIMATE AN ALLOWENCE FOR BAD DEPTS . THE PERCENTAGE SALES METHOD AND THE ACCOUNTS RECEIVABLE AGING METHOD .

• BAD DEPTS CAN BE WRITTEN -OFF BOTH THE BUSINESS AND INDIVIDUAL TEXT  RETURNS .

HOPE YOU UNDERSTOOD AND AGREE WITH THE ANSWER

PLEASE MARK IT AS BRAINLIEST

BE BRAINLY

KEEP ANSWERING

^  _-