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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.
Conservatism plays an important role in a number of accounting rules, including the allowance for doubtful debts [3] and the lower of cost or market rule, [4] which states that one should record inventory at the lower of either its acquisition cost or its current market value.
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 ...
Deferred tax assets generally arise where tax relief is provided after an expense is deducted for accounting purposes: a company may accrue an accounting expense in relation to a provision such as bad debts, but tax relief may not be obtained until the provision is utilized
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 ...
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.
A more specific definition in common use is an account with a balance that is the opposite of the normal balance (Dr/Cr) for that section of the general ledger. [34] An example is an office coffee fund: Expense "Coffee" (Dr) may be immediately followed by "Coffee – employee contributions" (Cr). [35]
What is good debt vs. bad debt? Some financial advisors believe that all debt is bad. Others advise against thinking of debt as universally bad, and instead say that good debt grows your value ...