Dangling Debit

DEFINITION of 'Dangling Debit'

A debit entry with no offsetting credit entry. Dangling debit occurs when a company purchases goodwill or services to create a debit. When adding the journal entry to financial statements a corresponding credit balance is not reported and cannot be written off. Dangling debit can be received when a company is acquired but is not recorded on the balance sheet.

BREAKING DOWN 'Dangling Debit'

When a company purchases goodwill, the company will receive a debit entry on its financial statements, but no entry is entered on the credit side and therefore a dangling debit is created. When a company uses dangling debit in their financial statements, it is offset by affecting the equity of the company by being listed as deductions or negative reserves.

RELATED TERMS
  1. Debit

    An accounting entry that results in either an increase in assets ...
  2. Debit Ticket

    An accounting entry recorded as a debit that acknowledges money ...
  3. Offline Debit Card

    A card that combines characteristics of both a traditional (online) ...
  4. Debit Note

    A document used by a purchaser to inform a vendor of the quantity ...
  5. Debit Memorandum

    1. A document given to an account holder which states that the ...
  6. Trial Balance

    A bookkeeping worksheet in which the balances of all ledgers ...
Related Articles
  1. Investing

    What Does Debit Mean?

    Debit is an accounting term used to refer to the left side of an accounting journal entry. Each debit must be offset by an equal credit entry.
  2. Investing

    What's a Debit Note?

    A debit note is a document used by a seller to inform a purchaser of a dollar amount owed. As the name indicates, it is a note from the seller that a debit has been made to the purchaser’s account. ...
  3. Investing

    How to Make a Closing Entry

    Observe the following procedure for making closing entries.
  4. Trading

    Understanding Forex Rollover Credits And Debits

    Forex trades are subject to receiving interest or being debited interest if positions are held overnight.
  5. Investing

    Explaining Double Entry Accounting

    Double entry is an accounting and bookkeeping term describing the method of entering transactions into the accounting records.
  6. Investing

    How Debit Cards Work

    Unlike credit cards, debit cards rely only on the funds available in the user’s account, so they do not let users borrow on credit. They frequently come with purchase limits, and using one at ...
  7. Personal Finance

    Credit vs. Debit Cards: Which Is Better?

    Be strategic about the card you choose
  8. Investing

    What's a Trial Balance?

    A trial balance is a worksheet listing the debit or credit balances of all the ledger accounts for an entity. Under accounting theory, the total of all the debits must equal the total of all ...
  9. Personal Finance

    10 Reasons To Use Your Credit Card

    There are several benefits to paying with credit instead of debit, if you use a credit card responsibly.
  10. Investing

    10 Reasons To Use Your Credit Card

    Charging purchases is not always a no-no. In fact, there are some very sound reasons for choosing this option.
RELATED FAQS
  1. How do you calculate credits and debits in the general ledger?

    Know the key points when balancing a ledger and why it's essential to understand the relationship between credits and debits ... Read Answer >>
  2. What are some examples of debit notes in business-to-business transactions?

    Review some examples of debit notes in business-to-business transactions and learn why debit notes would be used instead ... Read Answer >>
  3. What happens when my bank account is debited?

    Understand the process that takes place when your account is debited. A debit to your account happens when you use funds ... Read Answer >>
  4. Who uses debit notes in business transactions?

    Read about the types of parties that are most likely to issue or receive a debit note in the normal course of business-to-business ... Read Answer >>
  5. How do traders use debit spreads to protect against loss?

    Review an example of how a trader might use a debit spread to limit the maximum loss on an options transaction, limiting ... Read Answer >>
  6. Why do accountants use debits and credits instead of simple pluses and minuses? Why ...

    Debits and credits, and the technique of double-entry accounting, are credited (no pun intended) to a Franciscan monk by ... Read Answer >>
Hot Definitions
  1. Quantitative Trading

    Trading strategies based on quantitative analysis which rely on mathematical computations and number crunching to identify ...
  2. Bond Ladder

    A portfolio of fixed-income securities in which each security has a significantly different maturity date. The purpose of ...
  3. Duration

    A measure of the sensitivity of the price (the value of principal) of a fixed-income investment to a change in interest rates. ...
  4. Dove

    An economic policy advisor who promotes monetary policies that involve the maintenance of low interest rates, believing that ...
  5. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  6. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
Trading Center