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 Note

    A debit note is a document used by a purchaser to inform a vendor ...
  2. Footings

    A footing is the final balance when adding the debits and credits ...
  3. Bank Debits

    Bank debits are used in bookkeeping for realization of the reduction ...
  4. Blind Entry

    An accounting entry found in financial bookkeeping that is made ...
  5. Closing Entry

    A journal entry made at the end of the accounting period. The ...
  6. General Ledger

    A general ledger represents the formal ledger for a company's ...
Related Articles
  1. Personal Finance

    Debit Cards: Why They're Not As Safe As You Think

    Ditching your credit card can be a smart move, but debit isn't yet an equal alternative.
  2. IPF - Banking

    How To Keep Your Debit Card Transactions Safe

    Debit card use has become more popular than ever, but not every consumer knows what they need to do to make sure they keep their debit card safe.
  3. Tech

    What Are Cryptocurrency Debit Cards?

    Cryptocurrency debit cards could help to bring digital money into the everyday lives of consumers around the world. What are they and what do they do?
  4. 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 ...
  5. IPF - Banking

    6 Reasons You Don't Need A Prepaid Debit Card

    We'll look at six situations where a prepaid debit card might seem like a good idea, but it really isn't necessary.
  6. IPF - Banking

    Credit, Debit and Charge: Sizing Up The Cards in Your Wallet

    Not all plastic is equal! Learn the difference between the three kinds, and how each can affect your finances.
  7. Investing

    Amazon Prime Offers Discounts for Debit Card Use

    The company is saving on credit card fees and refunding some of the savings to customers.
  8. Insights

    How to Avoid the Hijacking of Your Credit Cards

    Arm yourself with these strategies on how to safely use your credit and debit cards, and protect yourself from fraud and identity theft with every swipe.
  9. IPF - Banking

    Debit or Credit at the Gas Pump: An Easy Choice

    Using credit rather than debit at the gas pump doesn't just provide more fraud protection. It also could give consumers lucrative benefits.
RELATED FAQS
  1. 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 >>
  2. What happens when my bank account is debited?

    A debit to your account happens when you use funds to purchase goods or services. Understand the process that takes place ... Read Answer >>
  3. What is double entry bookkeeping and how does it work in the general ledger?

    Learn about the double entry method of bookkeeping and how it works in the general ledger. Every accounting transaction has ... Read Answer >>
  4. How is an accrued interest entry made in accounting?

    Learn how to create common journal entries for accrued interest, including adjusting entries and delayed bond issues sold ... Read Answer >>
  5. Can Netspend cards be used internationally?

    Understand the benefits and pitfalls of NetSpend cards and discover whether they be use internationally. Then learn about ... Read Answer >>
  6. How do you record adjustments for accrued revenue?

    Understand what accrued revenue is and what it's used to measure. Learn how an accountant would record an adjustment to accrued ... Read Answer >>
Hot Definitions
  1. Economies of Scale

    Economies of scale refer to reduced costs per unit that arise from increased total output of a product. For example, a larger ...
  2. Quick Ratio

    The quick ratio measures a company’s ability to meet its short-term obligations with its most liquid assets.
  3. Leverage

    Leverage results from using borrowed capital as a source of funding when investing to expand the firm's asset base and generate ...
  4. Financial Risk

    Financial risk is the possibility that shareholders will lose money when investing in a company if its cash flow fails to ...
  5. Enterprise Value (EV)

    Enterprise Value (EV) is a measure of a company's total value, often used as a more comprehensive alternative to equity market ...
  6. Relative Strength Index - RSI

    Relative Strength Indicator (RSI) is a technical momentum indicator that compares the magnitude of recent gains to recent ...
Trading Center