Bad debt expense is an accounting term used to describe the expense associated with a customer or client who owes money to a company but is unable to pay. This can happen for a variety of reasons, such as the customer defaulting on a loan or not being able to pay their invoices on time. Bad debt expense is often reported as a separate line item on a company's income statement. Is bad debt expense a debit or credit? Bad debt expense is a debit on the balance sheet. What is bad debt expense journal entry? Bad debt expense journal entry is an entry made in the books of account to record the amount of money owed by the company to its creditors which is unlikely to be recovered. What is the opposite of bad debt expense? The opposite of bad debt expense is good debt expense. Is bad debts expense an operating expense? Yes, bad debts expense is an operating expense. This is because it is a necessary cost of running the business, and it is directly related to revenue.
What is bad debt expense example?
Bad debt expense is an accounting charge that is used to write off uncollectible receivables. This expense is used to reduce the value of accounts receivable on the balance sheet and to remove the associated income from the income statement.
For example, let's say that a company has $100 in accounts receivable and $10 of that is uncollectible. The company would record a bad debt expense of $10 and write off the $10 receivable. This would leave the company with $90 in accounts receivable on the balance sheet and $10 less in income on the income statement.