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The Complete Idiot's Guide® To Accounting by Lita Epstein, Shellie L. Moore

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Bad Debt

Any business that allows customers to buy on credit is likely to end up with some customers who don’t pay their bills. To minimize losses from delinquent customers, you need to monitor your Accounts Receivable account closely and cut off any customer who does not pay within a reasonable amount of time. Most businesses block future charges to any account more than 60 or 90 days late.
Even if you’ve acted quickly to block future charges, you still must find a way to get your money or decide that the money is uncollectible. Remember that you have to pay taxes on profits the business makes, and you certainly don’t want to pay taxes on money the company will never receive.
You have to decide how long you want to wait until you determine ...

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