Write-off - What is a write-off?
Definition: A write-off is when you charge your accounts for either a bad debt that you know you cannot collect, or obsolete/damaged stock that you know you cannot sell.
At the year end most companies take a look at their aged debtor and aged creditor reports with the view of “tidying them up”. If they contain minor under and over payments on the ledger cards that have sat there for some time, often companise will write them off. You can create an account in your chart of accounts to accommodate these amounts.
If your company holds stock and you discover that some of your stock has been damaged i.e. as a result of being in your warehouse (not due to your suppliers fault) then these would normally be written off since you are not able to sell them.
Again, a new account within your chart of accounts is normally created for these stock write offs.