Re: I think I finally get it!!
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Posted by bg
(68.88.64.167) on June 10, 2004 at 22:30:26:
In Reply to: I think I finally get it!! posted by J Kelly on June 10, 2004 at 21:03:59:
A charge-off (a tax deductible item) is more of a reversal of accrued revenue (a taxable item). Think of it this way. You go see the doctor and he charges you $100. That $100 is entered into the general ledger as revenue when the bill is sent out. The doctor now owes income tax on that $100, even though you have not paid him yet. The charge-off takes the $100 back out so that he doesn't have to pay the taxes on the money never received.
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