ALLOWANCE FOR BAD DEBTS Definition

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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NON-CASH EXPENSE is that expense which is recognized within the financial statements without actual cash being disbursed (e.g., depreciation, amortization, and write-offs).

GROSS MARGIN is the ratio of gross profit to sales revenue. (sometimes used as a synonym for gross profit). For a manufacturer, gross margin is a measure of a companys efficiency in turning raw materials into income; for a retailer it measures their markup over wholesale. GROSS MARGIN is gross income divided by net sales, expressed as a percentage.

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