If an AR account that will never be paid is considered what?

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1173105

2026-03-10 08:25

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An accounts receivable (AR) account that will never be paid is considered a "bad debt." Bad debts are amounts owed to a company that are unlikely to be collected, often due to customer bankruptcy or disputes. Companies typically write off bad debts as an expense, which impacts their financial statements by reducing net income and overall assets.

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