Is irrecoverable debt a debit or a credit?

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2026-03-20 03:20

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Irrecoverable debt, often referred to as bad debt, is treated as a debit. When a company recognizes that a debt will not be collected, it records an expense to reflect the loss, which increases expenses and decreases net income. This is typically recorded in an allowance for doubtful accounts or directly as a bad debt expense in the income statement.

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