ALLOWANCE FOR BAD DEBTS Definition

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ALLOWANCE FOR BAD DEBTS is an account established to record a subtraction from ACCOUNTS RECEIVABLE, to allow for those accounts that will not be paid.

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LEGALLY MANDATED is that which is required by law, e.g. the ratio of majority inhabitant vs. minority new-hire quotas in a legislated work environment.

LIABILITY, in accounting, is a loan, expense, or any other form of claim on the assets of an entity that must be paid or otherwise honored by that entity.

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