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Suppose your business offers its customers payment terms such as Net 30 and Net 15, you will ultimately bump into a customer who will make excuses to pay you off or possibly he could not pay you in real at all. When such situations keep piling up, you call it bad debt expenses.

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Owners Equity is the share of the total assets value owned by the owner and the shareholders of the company. (Equity = Assets - Liabilities)
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