Dictionary / Charge Off
What does Charge Off mean in accounting?
Quick definition
General(verb) To treat as a loss; to write off; to designate as an expense or loss an amount originally recorded as an asset. This term guides how bookkeepers record, classify, and explain related transactions in routine financial reporting.
Read more below
Examples
Last year's fertilizer you cannot return
Your garden center's March 12 count still lists 90 bags of last year's 10-10-10 fertilizer at $18 each ($1,620). The supplier reformulated the line and will not accept returns after February 28. Charge off the $1,620: reduce inventory and put the same amount on the March P&L. In QuickBooks Online or Xero, post an inventory adjustment to an inventory loss or cost of sales. Check the inventory valuation report; those bags should be gone.
A deposit you still expect back
Your catering kitchen paid a tent company $2,750 on April 4 as a deposit on a tent for a June wedding. The tent company cancels on May 12 but writes that the refund will hit your account by May 31, so the $2,750 still sits as Other current assets. Do not charge it off in May; you still expect cash. Charge it off only if June closes, the refund never arrives, and you give up. A write-down would leave a leftover deposit on the balance sheet; charging it off takes the whole remaining asset to expense.
Why it matters
You charge off an asset when you treat leftover value as a loss: you write off the amount so it leaves the balance sheet and hits expense. You will not post this most months; it shows up after a count finds inventory you cannot sell, or after a deposit or prepaid you will not recover. Leave the amount sitting and assets still look usable. Mix it up with chargeoff, the noun for the elimination itself, and you treat the leftover as a separate thing instead of the action you just took; a write-down leaves a reduced asset, while charging it off clears it.
Further reading
Compare this term with reference material from other accounting and finance websites.
Keep learning
Start with the bookkeeping basics, then compare software when you are ready to pick a tool.
Getting startedBookkeeping basics for small-business ownersWhat bookkeeping is, the records you need, double-entry in plain English, and a monthly rhythm that fits a 1–50 person shop.Updated October 4, 2026
RolesWhat does a bookkeeper do?A bookkeeper records bills, invoices, and bank activity so your books stay current. See the weekly work, the month-end close, and what they do not do.Updated August 18, 2026
Monthly closeMonthly bookkeeping: what to close each monthMonth-end is the job: reconcile banks and cards, age bills and invoices, check payroll, then read the reports. A close checklist for small-business owners.Updated August 18, 2026
Receipt CaptureThe 7 Best Receipt Capture Tools for Small BusinessThe 7 best receipt capture tools for small business, ranked: OCR accuracy, QuickBooks and Xero sync, real pricing, and honest tradeoffs for each pick.Updated August 9, 2026Frequently asked questions
What is Charge Off in bookkeeping?
(verb) To treat as a loss; to write off; to designate as an expense or loss an amount originally recorded as an asset.
When should I use Charge Off?
Use Charge Off when the transaction facts match its definition and you need the ledger and financial statements to reflect the correct account and period.
What is a common mistake with Charge Off?
Charge Off is used for charge off entries, while C&F covers a related but distinct bookkeeping purpose. Review both terms before posting unusual transactions. A common mistake is applying it by label only instead of checking the underlying transaction details.