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Bad debt definitionQuestion What is the definition of "bad debt"?
Answer Bad debt is an account receivable, or loan receivable, that is likely to be noncollectable and will be treated as a loss. Bad debt, when written off, is recorded as an expense to the income statement, thus affecting net profit.
Bad debt is often the result of being too aggressive on credit policy, making poor credit decisions, fraud, bankruptcy or unforeseen circumstance. 
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