REFINE SEARCH

TOPIC
  • All
  • Capital Investments
    17
  • Cost Management
    102
  • Financial Fundamentals
    109
  • Financial Ratios
    22
  • Planning and Budgeting
    37
TRAINING SERIES
  • All
  • Activity-based Costing
    2
  • Basic Cost Concepts
    83
  • Capital Investments
    25
  • Costing Fundamentals
    11
  • Financial Ratios
    22
  • Financial Statements
    107
  • Planning
    29
  • Standard Costs
    11

What is the difference between bad debt expense and the allowance for bad debt?

The allowance for bad debt or the provision for doubtful accounts is a valuation account that represents an estimate of the amount of receivables that a company does not expect to collect. It is subtracted from the accounts receivable balance, which is usually reported net of doubtful accounts on the balance sheet.  In the notes to the financial statements, you will find more detail on this line item. Bad debt expense is an estimate of the uncollectible accounts for the current accounting period. It is reported on the income statement. When you record bad debt expense on the income statement, you also increase the allowance for bad debt on the balance sheet. For more information, see our training modules, Understanding Financial Statements and The Balance Sheet or read our eBook, Understanding Financial Statements.

What is the difference between bad debt expense and the allowance for bad debt?
Register Sign Up FREE and start learning today!