Bad debts expense is related to a company's current asset accounts receivable.

Bad
debts expense is also referred to as uncollectible accounts expense or doubtful
accounts expense. Bad debts expense results because a company delivered goods or services
on credit and the customer did not pay the amount owed.

A contra asset account is an asset account where the account balance is a credit balance. It is
described as "contra" because having a credit balance in an asset account is contrary to the normal
or expected debit balance. (A debit balance in a contra asset account will violate the cost principle.

Accum. Debts
Amortization
Accum. Dep
Accumulated depreciation is the total amount of a plant asset's cost that has
been allocated  to depreciation expense (or to manufacturing overhead) since the asset was put into
service. Accumulated depreciation (and the related depreciation expense) are associated with
constructed assets such as buildings, machinery, office equipment, furniture, fixtures, vehicles, etc.
Accumulated Depreciation is also the title of the contra asset account. Accumulated Depreciation is
credited when Depreciation Expense is debited each accounting period.
Subtracting accumulated depreciation from an asset's cost results in the asset's book value or
carrying value. Hence, the credit balance in the account Accumulated Depreciation cannot exceed
the debit balance in the related asset account.

Depreciation expense is the appropriate portion of a company's fixed asset's cost that is being used
up during the accounting period shown in the heading of the company's income statement.

The Allowance for Doubtful Accounts is a balance sheet contra asset account that reduces the
reported amount of accounts receivable. The use of this allowance account will result in a more
realistic picture of the amount of the accounts receivable that will be turning to cash, since some
customers may not pay the full amount owed to the company.
The credit balance in the allowance account is an estimate amount in an adjusting entry that debits
the income statement account Bad Debts Expense and credits Allowance for Doubtful Accounts.
While the allowance account is recommended for the company's financial statements, it is not
acceptable for income tax purposes.

Ledger
Journal

9 steps of accounting cycle

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