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What is the difference between Bad Debts and Doubtful Debts?

Bad Debts vs Doubtful Debts

Difference between Bad Debt and Doubtful Debt

What is a bad debt?

Bad debt is a loan that has become worthless. Bad debts can occur as a result of a business decision or from outside circumstances, such as illness or death of the borrower.

A lender may accept this loss by writing off the entire amount of money owed to them on their income tax return. Bad debts are considered to be uncollectible. Therefore, no matter how hard you try or what strategies you use, there is no way that the money can be collected.

What are doubtful debts?

A doubtful debt is one for which there is some doubt as to whether or not the full amount will be collected. You may consider a doubtful debt as being almost worthless, but it still has some value.

A doubtful debt can be recovered if a borrower makes payments or repays the loan in full. However, you will have to change your business practices and procedures in order to collect this money.

Bad Debts vs Doubtful Debts: What are the differences?

  1. Bad debt is an uncollectible loan.
  2. A doubtful debt is one for which there are doubts as to whether or not the full amount will be collected. However, a doubtful debt can become a bad debt if it is no longer collectible and has gone into default status.
  3. A doubtful debt can be recovered if a borrower makes payments or repays the loan in full. But a bad debt is considered to be uncollectible.
  4. The difference between a doubtful debt and bad debt is that the former can be recovered as long as you make some changes in your business practices and procedures while the latter cannot be collected even if you try every possible way to collect it.
  5. Bad debt is an uncollectible loan that has become worthless because of unforeseen circumstances, such as death or prolonged illness of the borrower. It is not possible to get this money back even if you try every possible way to collect it.
  6. If a business makes loans to its customers, the money lent to them is considered a bad debt if they do not pay back.
  7. You can take a deduction for bad debts on your income tax return if you made a loan and it became worthless because of certain circumstances, such as death or prolonged illness of the borrower.

These are some of the important differences between bad debts and doubtful debts. To be able to understand it better, let’s look at some examples.

Bad Debt Example: A Bad Loan John has a bad credit score and can’t get any loans from regular lending sources. He then applies to the bank for a loan and is approved for $5000 with an interest rate of 10% per year. He takes this money and invests it in a business venture.

However, his investment does not fare well and he is unable to pay back the loan on time. The bank then sends him a letter saying that he has missed three consecutive payments and if he misses another payment, they will consider his loan to be in default. John then files for bankruptcy and is no longer able to pay back the loan.

The bank writes off the loan as a bad debt so that it can deduct this amount from its income tax return if required.

In this example, John’s loan was considered bad debt because he was unable to pay back the loan even after he invested his money in a business venture.

Doubtful Debt Example: A Doubtful Loan Jim owns a business and lends $1000 to one of his employees. The employee is not sure whether or not he will be able to pay the money back because of his bad credit score, so Jim decides that it would be best if he lent him a smaller amount.

However, Jim is not able to recover the amount even after several months and decides that it is no longer worth trying to get this money back. In this example, not all of the $1000 was considered bad debt because Jim had some hope that he would be able to collect at least most of his loan. However, since he did not recover it, the amount is considered a doubtful debt for tax purposes.

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What is the difference between Strategic Control and Operational Control?

Strategic Control vs Operational Control

Difference between Strategic Control and Operational Control

What is Strategic Control?

Strategic control is the process of developing an overall strategy for your business that will help you achieve what you want to accomplish. It is essentially the overarching goal or objective of your organization, and it includes a series of sub-goals that are focused on individual aspects within the organization.

It can be defined as the process of achieving strategic outcomes through planning, integration, and coordination. The main goal is to target a set of specific objectives by developing long-term plans that will help you achieve your business objective(s). Then, depending on which approach is taken toward these goals (i.e., top-down vs bottom-up), the strategic plan is developed.

What Does Strategic Control Mean for Your Business?

The main goal of strategic control is to create a comprehensive business strategy by integrating many different aspects of your organization into one cohesive unit. This will help you achieve success in the long run and keep your company on track to meet its goals, objectives, and projections.

Strategic control is a very important step in the overall business development process because it helps you make decisions that will be beneficial to your company’s success down the road.

What is Operational Control?

Operational control is the process of monitoring and evaluating strategic plans, along with any other long-term objectives that have been established for your business. It centers on developing ways to measure performance against these goals (or objectives) in order to establish whether adjustments are necessary for achieving them.

In short, operational control represents a way to put strategic control into action. Operational control can be defined as the process of monitoring and evaluating business strategy in order to achieve desired performance results. It is a phase that involves implementation, evaluation, and continuous improvement of your overall plan (i.e., strategic) because it helps ensure that you will achieve your goals.

What Does Operational Control Mean for Your Business?

Operational control is an important part of the overall strategic planning process because it helps you measure your performance against these goals and objectives, which ultimately allows you to make adjustments in order to achieve them successfully.

It also provides a way to evaluate whether or not the strategic control process is working effectively. In other words, operational control allows you to determine whether various aspects of your business are being properly managed and there aren’t any issues that need to be addressed by management.

Strategic Control vs Operational Control: What’s the difference?

  1. Strategic Control is a process that involves developing a strategy and then establishing various objectives that will help you achieve your business goals. On the other hand, Operational Control is a process that involves monitoring, measuring, and evaluating strategic objectives to ensure that you are achieving your goals.
  2. Strategic Control focuses on developing an overall strategy for your business while Operational Control focuses on the execution of this strategy in order to achieve your goals successfully.
  3. Strategic Control occurs before the operational control process and allows you to develop a strategy that will be used in order to achieve your goals or objectives.
  4. Strategic Control is an overall plan that includes various long-term objectives for your business while Operational Control involves monitoring, measuring, and evaluating strategic plans on a regular basis and making necessary adjustments in order to achieve your goals.
  5. Strategic Control focuses on the overall outcome of your business while Operational Control is more focused on individual aspects within your company.
  6. Strategic control involves developing a strategy and then setting various objectives to help you achieve these strategies, which then leads into the operational control process (i.e., execution). On the other hand, operational control involves monitoring and evaluating strategic objectives to ensure that you are achieving your goals.

These are the main differences between strategic control and operational control. In a business, both of these processes are very important and essential to achieving success. It’s highly recommended that you have both strategic control and operational control in place within your company.

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What is the difference between Purchase Book and Purchase Account?

What is the difference between Purchase Book and Purchase Account

Difference between Purchase Book and Purchase Account:

What is a Purchase Account?

A purchase account is an asset that represents a liability in the form of goods or services purchased by a company. Purchase accounts are used to define what assets have been purchased and how much those assets cost, but also give companies the ability to show where they got the money for their investments.

For example, if you buy a computer for your business, you can record the purchase of that computer as an expense in the form of a cost object. Then, when you pay for it with cash or another asset, that transaction will show up on one of your accounts payable lines.

What is a Purchase Book?

A purchase book is a physical or digital record of all transactions involving purchases. Purchase books are used to track the cost and amount of each item purchased by a company, along with when the transaction occurred.

Purchase books also usually have information about what vendor was paid for those items as well as how much cash was used to pay for the items. Purchase books are useful in that they allow companies to quickly and easily find information about what they purchased as well as how much they paid for the item.

Purchase Book vs Purchase Account: What’s the difference?

  1. Purchase books and purchase accounts are not the same things.
  2. A purchase book is a record of purchases in your accounting system while a purchase account is an asset on the balance sheet that represents those items purchased as well as where you got the money to buy them.
  3. Purchase accounts are used to define the assets you have purchased, but purchase books show what those items were and how much you paid for them.
  4. Purchase accounts are not used to track your purchasing history, making purchase books an important record of all purchases made by a company.
  5. Purchase books are usually maintained by an accounting department since they do require some level of manual tracking, while purchase accounts can be set up in most accounting software programs and used automatically for each transaction.
  6. Purchase accounts are used to show the value of assets on your balance sheet while purchase books record how much you paid for those items and where that money came from.
  7. Purchase books usually have a place to list what vendor was paid, which is not recorded in purchase accounts.
  8. Purchase books are typically more detailed than purchase accounts, which simply show the amount of an asset that has been purchased by a company while purchase books also list information about what vendor was paid for those items and when the transaction occurred.

These are some of the main differences between purchase books and purchase accounts. Some of the information in a purchase book is recorded automatically when you set up those accounts, while some of that data has to be manually entered into your accounting system so it can be used by the software program.

Purchase books are also usually only maintained by an accounting department since they do require a level of manual tracking, but purchase accounts can be set up in most accounting software programs and used automatically for each transaction.

If you’re looking to use your purchase book more as an asset system, a record of what items you purchased, then a purchase account may be the better option for your business.