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What is meant by accounts written off?

Author:
Harold Averkamp, CPA, MBA

Definition of Accounts Written Off

Accounts written off is likely referring to accounts receivable that a company deemed to be uncollectible and were removed from the general ledger account Accounts Receivable.

Example of Accounts Written Off

Assume that one of a company’s customers who were given 30 days in which to pay has filed for bankruptcy and the customer’s assets are close to $0. Therefore, there will be no amount left to pay any of the $4,000 it owes to the company. The company will write off the uncollectible account by crediting Accounts Receivable for $4,000. The account the company will debit for $4,000 depends on whether the company has the contra-asset account Allowance for Doubtful Accounts.

If the company has the Allowance account, the company will debit Allowance for Doubtful Accounts for $4,000.

If the company does not have an Allowance account, the company will debit Bad Debts Expense for $4,000.

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About the Author

Harold Averkamp

For the past 52 years, Harold Averkamp (CPA, MBA) has
worked as an accounting supervisor, manager, consultant, university instructor, and innovator in teaching accounting online. He is the sole author of all the materials on AccountingCoach.com.

Learn More About Harold

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