Write-Off

AAA

DEFINITION of 'Write-Off'

A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues.

INVESTOPEDIA EXPLAINS 'Write-Off'

For example, if you spend money on dinner to take out a client, that meal is a possible write-off towards your income because you presumably discussed business opportunities during the dinner.

Suppose, for another example, you made a sale on credit to a customer, but two weeks later the client's business declared bankruptcy and became completely unable to pay off the credit account with you. This uncollectible debt would then be written-off by your company and recorded as an expense by accountants.

RELATED TERMS
  1. Discontinued Operations

    A segment of a company's business that has been sold, disposed ...
  2. Home Office Expense

    Expenses incurred from the operation of a business or the performance ...
  3. Operating Expense

    A category of expenditure that a business incurs as a result ...
  4. Write-Down

    Reducing the book value of an asset because it is overvalued ...
  5. Cash Flow

    1. A revenue or expense stream that changes a cash account over ...
  6. Asset

    1. A resource with economic value that an individual, corporation ...
RELATED FAQS
  1. What are some examples of ways businesses can use a deferred tax asset?

    In the United States, allowable claims of deferred tax assets are set forth by the Financial Accounting Standards Board, ... Read Full Answer >>
  2. If I pay for a course to learn about trading can I write some of it off?

    There are some investing costs that can be written off each year, even if you aren't a day trader. The general rule in determining ... Read Full Answer >>
  3. What is the best software for calculating trial balances?

    Trial balance software is used to generate reports comparing the total debits and total credits in a double entry book keeping ... Read Full Answer >>
  4. What's the difference between a trial balance and a balance sheet?

    There are many differences between a trial balance and a balance sheet. For example, a trial balance is an internal report ... Read Full Answer >>
  5. What's the difference between a trial balance and an adjusted trial balance?

    A trial balance is a simple accounting report that gives a picture of a business at periodic intervals, such as monthly or ... Read Full Answer >>
  6. What is the difference between an accrual and an account payable?

    The difference between an accrual and an account payable is that an accrual is an accounting adjustment for revenue that ... Read Full Answer >>
Related Articles
  1. Taxes

    Cut Taxes By Reporting Property Damage

    Know the options you have for your insured property if and when a disaster strikes.
  2. Retirement

    Tax Tips For The Individual Investor

    We give you seven guidelines to help you keep more of your money in your pocket.
  3. Taxes

    How To Qualify For The Home-Office Tax Deduction

    Homebodies can save big on their tax bill. Learn how to get in on the action.
  4. Entrepreneurship

    Can You Handle A Home-Based Business?

    Find out if you have the traits to be a top entrepreneur.
  5. Retirement

    Tax Breaks For Canadian Families

    Canadians have a lot of advantages when it comes to family tax perks.
  6. Personal Finance

    Promissory Notes: Not Your Average IOU

    These may be a handy way to borrow money, but this convenience does not come without risk.
  7. Options & Futures

    Employee Stock Options (ESO)

    Employee stock options are a form of equity compensation granted by companies to their employees and executives.
  8. Savings

    Assessing Bank Assets: Are Your Savings Safe?

    Learn how to determine if your assets are safe or if your bank has spread itself too thin.
  9. Personal Finance

    Is Your Bank On Its Way Down?

    Find out how the Tier 1 capital ratio can be used to tell if your bank is going under.
  10. Personal Finance

    In A Cash Crunch? Hold A Yard Sale

    Lighten your load for a heavier wallet. We'll provide helpful tips to ensure a successful sale.

You May Also Like

Hot Definitions
  1. Fixed-Income Arbitrage

    An investment strategy that attempts to profit from arbitrage opportunities in interest rate securities. When using a fixed-income ...
  2. Venture-Capital-Backed IPO

    The selling to the public of shares in a company that has previously been funded primarily by private investors. The alternative ...
  3. Merger Arbitrage

    A hedge fund strategy in which the stocks of two merging companies are simultaneously bought and sold to create a riskless ...
  4. Market Failure

    An economic term that encompasses a situation where, in any given market, the quantity of a product demanded by consumers ...
  5. Unsystematic Risk

    Company or industry specific risk that is inherent in each investment. The amount of unsystematic risk can be reduced through ...
  6. Security Market Line - SML

    A line that graphs the systematic, or market, risk versus return of the whole market at a certain time and shows all risky ...
Trading Center