An account becomes uncollectible when it is determined that the debtor is unable or unwilling to pay the outstanding debt. This determination can be based on several factors, including:

1. **Age of the Receivable**: Accounts that have been outstanding for an extended period, typically beyond 90 to 180 days, are often considered uncollectible.

2. **Debtor's Financial Condition**: If the debtor has declared bankruptcy or is experiencing severe financial difficulties, the account may be deemed uncollectible.

3. **Lack of Communication**: If repeated attempts to contact the debtor have failed, it may indicate that the account is uncollectible.

4. **Legal Action**: If legal action to recover the debt has been unsuccessful or deemed not cost-effective, the account may be written off as uncollectible.

5. **Internal Policies**: Companies often have specific policies and criteria for determining when an account should be classified as uncollectible.

Once an account is deemed uncollectible, it is typically written off as a bad debt expense in the financial statements.

Question

An account becomes uncollectible when it is determined that the debtor is unable or unwilling to pay the outstanding debt. This determination can be based on several factors, including:

1. **Age of the Receivable**: Accounts that have been outstanding for an extended period, typically beyond 90 to 180 days, are often considered uncollectible.

2. **Debtor's Financial Condition**: If the debtor has declared bankruptcy or is experiencing severe financial difficulties, the account may be deemed uncollectible.

3. **Lack of Communication**: If repeated attempts to contact the debtor have failed, it may indicate that the account is uncollectible.

4. **Legal Action**: If legal action to recover the debt has been unsuccessful or deemed not cost-effective, the account may be written off as uncollectible.

5. **Internal Policies**: Companies often have specific policies and criteria for determining when an account should be classified as uncollectible.

Once an account is deemed uncollectible, it is typically written off as a bad debt expense in the financial statements.

Knowee AI · Accepted Answer

An account becomes uncollectible when it is determined that the debtor is unable or unwilling to pay the outstanding debt. This determination can be based on several factors, including:

1. **Age of the Receivable**: Accounts that have been outstanding for an extended period, typically beyond 90 to 180 days, are often considered uncollectible.

2. **Debtor's Financial Condition**: If the debtor has declared bankruptcy or is experiencing severe financial difficulties, the account may be deemed uncollectible.

3. **Lack of Communication**: If repeated attempts to contact the debtor have failed, it may indicate that the account is uncollectible.

4. **Legal Action**: If legal action to recover the debt has been unsuccessful or deemed not cost-effective, the account may be written off as uncollectible.

5. **Internal Policies**: Companies often have specific policies and criteria for determining when an account should be classified as uncollectible.

Once an account is deemed uncollectible, it is typically written off as a bad debt expense in the financial statements.

When does an account become uncollectible?

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When does an account become uncollectible?

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