Amount Which Is Not Recoverable From Customer Is Known As

Amount Which Is Not Recoverable From Customer Is Known As

(A) Bad Debts

(B) Debts

(C) Debtors

(D) Doubtful Debts

Answer  ( A )Bad Debts

Bad debt is an expense incurred by a business when a customer’s repayment of credit previously extended to them is estimated to be uncollectible and thus recorded as a charge off.

Bad debt is a risk that all businesses that extend credit to customers must account for, as there is always a chance that payment will not be made.

There are two methods for identifying bad debt expenses. Accounts are written off using the direct write-off method when they are directly identified as uncollectible. In the United States, this method is used for income tax purposes. While the direct write-off method records the exact amount for accounts that are determined to be uncollectible, it does not adhere to the matching principle.