Bad Debts - What is bad debt example?

Q: What is bad debt example?

In accountancy we refer to such receivables as Irrecoverable Debts or Bad Debts. Bad debts could arise for a number of reasons such as customer going bankrupt, trade dispute or fraud. Every time an entity realizes that it unlikely to recover its debt from a receivable, it must 'write off' the bad debt from its books.

Answer

Such receivables are known as Irrecoverable debts or bad debts in the accounting world. Many things can lead to bad debts, including a customer's bankruptcy, a disagreement in a deal, or even outright fraud. "Writ off" the bad debt from books whenever an organization believes it is unlikely to recover its obligation from a receivable.

Bad Debts - What is bad debt example?

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