Doubtful debt
A doubtful debt is a receivable whose collection is uncertain. In FA bookkeeping, an allowance can recognise the estimated non-collection while the customer balance remains in the ledger. If an amount is specifically identified as irrecoverable, write it off instead. Review the evidence at year end and avoid charging both a full write-off and an allowance on the same balance.
Worked example
A customer owing $1,000 is expected to pay only $600. An appropriate $400 specific allowance reduces the net receivable while collection efforts continue.
Common mistake
Doubtful does not mean automatically written off in full, and an allowance is not a separate liability owed to the customer.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | F1 | Direct | July 2027–August 2028 |
| ACCA | FA | Direct | September 2026–June 2027 |
| ACCA | K1 | Direct | July 2027–August 2028 |
| CIMA | BA3 | Direct | Official assessment-window verification pending |
| FIA | FFA | Direct | September 2026–June 2027 |
Related terms
Also called: Doubtful receivable