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Debt Discussions about debt and how to deal with debt.

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  #1  
Old 09-02-2015, 03:25 AM
asjin1212 asjin1212 is offline
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Default Bad Debts

What is bad debts?

The term bad debts usually refers to accounts receivable (or trade accounts receivable) that will not be collected. However, bad debts can also refer to notes receivable that will not be collected.

The bad debts associated with accounts receivable is reported on the income statement as Bad Debts Expense or Uncollectible Accounts Expense.

When the allowance method is used, the journal entry to Bad Debts Expense will include a credit to Allowance for Doubtful Accounts, a contra account and valuation account to the asset Accounts Receivable. The allowance method anticipates the losses and therefore requires the use of estimates.

Under the direct write-off method, the Allowance for Doubtful Accounts is not used. Rather, Bad Debts Expense will be debited when an account receivable is actually written off. The credit in this entry will be to the asset Accounts Receivable.




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  #2  
Old 04-02-2016, 12:43 PM
Here2help Here2help is offline
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Default Re: Bad Debts

That is a good definition on how it is defined by the business world.

However I look at debt differently. I don't believe that there is good debt. All debt is equal.

We all want to Financial Freedom. Financial Freedom is by definition the absence of money dominating you. A debt is an obligation of repayment or better stated as money forces you to have to work to payback (dominating you).

So for me all debt is bad.

There is other ways that you can leverage money other than debt
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Old 04-14-2016, 12:42 AM
micvanlen micvanlen is offline
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Default Re: Bad Debts

I agree with Here2help, but is there a question in the root post?
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