What is classified as an account receivable that is deemed uncollectible?

The classification of an account receivable as uncollectible is described as "Bad Debt." This term refers specifically to amounts owed to a business that are considered unlikely to be collected, often due to the debtor's inability to pay, bankruptcy, or other financial difficulties. When a company identifies that a specific account will not be paid, it recognizes this debt as bad debt, impacting its financial statements by reducing net income and accounts receivable.

Write-offs and charge-offs generally refer to the accounting action taken when bad debt is formally removed from the books, signifying that a determination has been made that the amount will not be recovered. Meanwhile, a reserve typically pertains to an allowance established to cover expected future bad debts, rather than specifically indicating a single instance of an uncollectible account. Thus, bad debt is the most precise term for those receivables that have been determined to be uncollectible.