allowance for doubtful accounts

(redirected from Bad Debt Allowance)

Allowance for Doubtful Accounts

Extra funds from sales, or another source, set aside in order to pay off bad debt if and when it arises. The allowance helps a company ward off any potential cash flow problems should its credit sales not be repaid as expected. On financial statements, it is important to note that an allowance for bad debts exists for fiscal conservatism and not because one expects a large amount of bad debt to accumulate. An allowance for doubtful accounts is also called a cushion. Banks call these funds the loan loss reserve. See also: Savings account.

allowance for doubtful accounts

A balance-sheet account established to offset expected bad debts. If a firm has made a sufficient provision in its allowance for doubtful accounts, reported earnings will not be penalized by bad debts when the bad debts occur. If uncollectible accounts are larger than expected, however, the firm will have to increase the size of the account and reduce reported income. Also called allowance for bad debts, reserve for bad debts.
References in periodicals archive ?
4% to $127 million, well within the bad debt allowance of $430 million.
The improvement in sales and marketing expenses was a result of lower product demonstration costs, lower bad debt allowance requirements due to accounts receivable collection and aging improvement, and a quarter over quarter decline in sales expenses associated with the Company's Spine business following the restructuring of its Americas sales organization in 2009.
The company said it is currently evaluating whether it needs to record expenses related to the impairment of investments made by its Japanese subsidiary and bad debt allowance related to accounts receivable from its Chinese distributor.
Baker Corporation has sold goods to Charlie Company for more than 15 years and never once had a problem with collections; hence, Baker makes no bad debt allowance.
25 billion--still exceeding the bad debt allowance of $1.
The downgrade also reflects MSHA's weakened liquidity position due to the volatile market conditions and an increase in MSHA's bad debt allowance.
Bad debt allowance for the six months ended June 30, 2008 was $12.
0 million Bad debt allowance account against various investments within our portfolio.
Adjusted EBITDA of ($535,916), which includes approximately $350,000 of Sarbanes Oxley related expenses and approximately $200,000 of additional bad debt allowance due to increased sales activity
Another manipulative practice uncovered by internal CEC audits is delaying reporting on dropped students until after the close of a reporting period, because drops require a higher bad debt allowance.
Estimated negative impact on fiscal year 2003 caused by poultry industry profitability: Reduced Reduced Reduced Net Sales Gross Margin Income Before Tax Idle Plants $1,376,000 $960,000 $960,000 Reduced Plant Thruput 276,000 193,000 193,000 Asset Impairment 100,000 Bad Debt Allowance 27,000 $1,652,000 $1,153,000 $1,280,000
Management noted that the reduction in revenues in the current quarter, when compared to the same period last year, reflects the sales and marketing reorganization of the PST business including the termination of the Dumex Agreement in June 2000, lower test volume from Straumann USA and a one-time adjustment for bad debt allowance.