Question by  bozguy (22)

How does a church write off bad debts, what is the accounting procedure that they use?

I am trying to understand accounting for non for profit organizations, for example churches, and writing off of bad debt.


Answer by  Chaneygirl (1755)

They would credit accounts receivable and debit bad debt expense or something similar. If they never recorded the accounts receivable, they would not do anything.


Answer by  mediajunkie (592)

It would be the same accounting procedure as any for-profit organization. Keep receipts and records to show that several attempts have been made to collect the debt and an appropriate amount of time (usually 6 months) has passed before it can be written off.


Answer by  zuidlaren (53)

Churches are considered to be non profit organizations not subject to income tax in most countries. The write off would be at the discretion of the church administrators, without any tax implications.


Answer by  BrianSJ (524)

Churches write off bad debts in the same way as other for-profit and nonprofit institutions, as they are governed by the same GAAP rules under the FASB. The accounts receivable that won't be paid are written off against revenue or equity, depending on the age of the bad debt.

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