Final answer:
A bad debt is a customer account that is not expected to be collected. It is recorded as an expense on the income statement and as an allowance for bad debts on the balance sheet.
Step-by-step explanation:
A customer account that is not expected to be collected is referred to as a bad debt. This occurs when a business recognizes that a customer is unable or unwilling to pay the outstanding balance. It is recorded as an expense on the income statement and as an allowance for bad debts on the balance sheet.
For example, if a customer declares bankruptcy or consistently fails to make payments, their account may be classified as a bad debt.