Accounts Reconciliation Blog

It is common occurrence to buy something defective. This has happened to everybody.  When it happens, you either return it for a refund or have the item exchanged. This is common sense. What’s not common sense is if you work for an organization. Refunds and exchanging items entail paperwork. This will fall under write-offs of accounts payable.

Write-offs of accounts payable is not a “write-off” per se. Often you just close the account. For example, if you bought a computer for a $1,000 and found it defective, you would either get it replaced or get a refund. To “write-off” the computer you close that entry with its serial number and replace it with a new entry (replaced computer with a new serial number). If on the other hand, you bought something defective and haven’t paid for it yet, you can simply cancel the order but don’t forget to note the reason for cancellation.