This question is about accountant assistant skills.

What is a write-off in accounting?

By Zippia Team - Feb. 1, 2023

A write-off in accounting is a financial action that decreases the value of an asset while also acquiring a debt in a liabilities account. Businesses use write-offs primarily to:

Account for unpaid loan obligations the organization has
Account for unpaid receivables
Account for losses concerning stored inventory

In broad terms, a write-off in accounting is also an action that helps reduce the amount of taxes a business owes at the end of a fiscal year. In this sense, the term write-off might refer to any of the following:

Credits
Deductions
Expenses
Tax credits

Companies have the opportunity to claim specific deductions on their taxes that results in them owing less money to the IRS. Expense write-offs in particular normally increase an organization's expenses, which results in lower profits, and this might put the company in a tax bracket that requires it to pay overall less taxes.

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