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. Trial Balance

    A trial balance is a bookkeeping worksheet in which the balances ...
  2. General Ledger

    A general ledger represents the formal ledger for a company's ...
  3. Debit Card

    A debit is a payment card that deducts money directly from a ...
  4. Closing Entry

    A closing entry is a journal entry made at the end of the accounting ...
  5. Adjusted Debit Balance

    Adjusted debit balance is the amount owed to the broker in a ...
  6. Current Liabilities

    Current liabilities are a company's debts or obligations that ...
Related Articles
  1. IPF - Banking

    Credit versus debit cards: Which is better?

    Credit and debit cards may look identical, it is important to note their differences. Be strategic about which card you choose and learn more about which is better for you.
  2. Personal Finance

    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.
  3. Investing

    How to use Excel as a general accounting ledger

    Follow these steps to set up a general ledger accounting system in Excel. A small business can use Excel as a substitute for expensive accounting software.
  4. Personal Finance

    How To Live Without A Credit Card

    Debit cards are more widely accepted and provide better fraud protection than in the past.
  5. 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.
  6. Personal Finance

    10 Reasons To Use Your Credit Card

    There's a surprising credit card strategy you should employ as a consumer ... use your card for everything (or almost).
  7. Investing

    How Does Goodwill Affect Stock Prices?

    Intangibles like goodwill have a role in stock prices, but just how much really?
  8. Small Business

    How Sending Money on Facebook Works

    Learn how Facebook users can send and receive money within their social network, and understand how the site benefits financially from offering this service.
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 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. 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 >>
  4. What's the difference between the general ledger and a general journal?

    Keeping records for most organizations require a double-entry bookkeeping system, which revolves around transactions in the ... Read Answer >>
  5. 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 >>
Trading Center