Is bad debts is non-operating expeses?

Answer 1

Yes, bad debts are considered non-operating expenses. They occur when a company is unable to collect payments from customers, leading to a loss that is not directly related to its core operations. This classification helps differentiate regular operating expenses from those that arise from financing or other non-core activities. As such, bad debts are typically recorded separately in financial statements to provide clearer insights into a company's operational performance.