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What are Bad Debts

What are Bad Debts and what are their influence on the value of debtor?

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Bad Debts: Each and every debtor is not honest and it might possible that certain of amount might loss due to not paying by debtor of business. Suppose that, Ram has taken goods from X-company of $ 50000 although he does not pay $ 10000 and the entire other amount he paid, therefore this amount will become Bad Debt and this is the loss of business. Total value of debtor will reduce with the amount of bad debts.

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