Bad Debt Expense
Accounting glossary · Understand, connect, apply
Bad debt expense is an expense associated with estimated or identified losses from customer receivables. It is often described as credit-loss expense under modern reporting requirements.
Example
If the required allowance increases from $200 to $350 with no other movements, the illustrative adjustment is a $150 expense and allowance increase.
Remember the difference
Writing off a balance against an existing allowance normally does not create the same expense again.
Updated 3 November 2026. Examples are simplified for learning. Where a term depends on US law, IFRS, US GAAP or a historical rule, check the context explained above and the requirements relevant to your course.
Study references: OpenStax financial accounting and managerial accounting. For reporting requirements, consult the applicable IFRS Standards or FASB guidance. US tax terms should be checked against the relevant tax-year IRS instructions.
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