A doubtful account or doubtful debt is an account receivable that might become a bad debt at some point in the future. If customers purchase on credit, establishing an allowance of doubtful accounts is an important tool for your balance sheet and income statement.

What accounts are doubtful?

A doubtful account refers to money owed to a business by its clients. But the catch is, it's money that the business doesn't expect to receive. (It's “doubtful” you'll collect.)

What is a doubtful debt in business?

What is doubtful debt? Doubtful debt refers to the money a business is owed by its customers, that it doesn't expect to receive.