What should typically happen to accounts deemed as bad debt?

When accounts are deemed as bad debt, the appropriate approach is to write them off and consider the possibility of collecting them through a collection agency. This process reflects an understanding of how to manage accounts receivable effectively while also recognizing that not all debts will be recovered. Writing off the account allows the practice to accurately present its financial position by removing the uncollectible amounts from its books, which ultimately prevents an overstated financial status.

By sending the account to a collection agency, the practice can potentially recoup some of the losses, as these agencies specialize in debt recovery. The action of attempting to collect through a collection agency is a strategic decision aimed at maximizing recovery and mitigating financial losses.

Other options, such as deleting accounts immediately or sending them to governmental organizations, do not reflect standard accounting practices and may lead to inaccurate financial records. Additionally, writing off accounts without any potential for recovery fails to take advantage of viable avenues to recover funds that might still be collectible through professional means.