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In finance, bad debt, occasionally called uncollectible accounts expense, is a monetary amount owed to a creditor that is unlikely to be paid and for which the creditor is not willing to take action to collect for various reasons, often due to the debtor not having the money to pay, for example due to a company going into liquidation or insolvency.
Examples are accumulated depreciation against equipment, and allowance for bad debts (also known as allowance for doubtful accounts) against accounts receivable. [33] United States GAAP utilizes the term contra for specific accounts only and does not recognize the second half of a transaction as a contra, thus the term is restricted to accounts ...
Controlling bad debt exposure and expenses, through the direct management of credit terms on the company's ledgers. Maintaining strong cash flows through efficient collections. The efficiency of cash flow is measured using various methods, most common of which is Days Sales Outstanding (DSO).
Good debt is preferable because it builds value, but there are cases where bad debt is the best choice. For instance, using a loan to buy a reliable car to get you to and from work is a good use ...
Fixed Expenses vs. Variable Expenses: Quick Take. If you want to make sure you have enough money for necessities and unplanned expenses, you must create a budget. For that, learning the difference ...
The word "debt" has all kinds of negative connotations -- and with good reason. Carrying a heavy debt load not only jeopardizes your financial security, but it can also lead to everything from ...
A Company Voluntary Arrangement (CVA) is a legal agreement between the company and its creditors, based on paying a fixed amount lower than the outstanding actual debt. These are normally based on a monthly payment, and at the end of the agreed term the remaining debt is written-off.
Credit card debt is typically the most expensive debt that you can carry. Interest rates on credit cards are often in the double digits and can be over 20%, even for those with good credit.