[RAVISHING GIRL1]

Hello!
I'm too much confuse in Bad debts.:confused:
What is written off?
What is Bad debt?
Thanks 4 advice and help.

[morgaine300]

Hi. I can give you some general ideas. Bad debt is when someone owes you money but it is never collected on. A good example is if one of your customers files for bankruptcy and you know you're never going to see the money they owe. But they don't have to file for bankruptcy. After a certain time you can assume something won't be collected, or you may have had discussions with the customer indicating so. We don't take it back off the revenue account. We expense it as bad debt. Think of it like "the expense of not being able to collect on accounts."

Writing something off means picking out a customer's account that you've decided you'll never collect and removing it out of receivables. It may as well not be there if you won't get paid, as that account represents amounts you're owed. It's an asset and has a worth because you'll collect cash on it. But it has no worth if it won't be collected.

There are two methods we use to do bad debt, but it could get long and complicated trying to explain the entire thing. If you have more questions about that, then post again and ask a more specific question.