allowance for doubtful accounts

(redirected from Bad Debt Provision)

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 ?
On Monday, Dairy Crest said it intended to add [pounds sterling]4m to its bad debt provision to reflect monies owed to it by Quadra Foods.
Bad debt provision of pounds 75million saw profits slashed from more than pounds 33million a year ago.
The firm, who sell household goods under names such as the Cotswold Company, Kitbag and Ace, said they were adding pounds 5million to their bad debt provision for the year until March 31, with profits hit as a result.
According to Lancaster, this was due to a one-time pretax bad debt provision of about $5 million, which covered the exposure from a bankruptcy filing of a major distributor of the company's specialty food products to the food-service industry.
and a bad debt provision of $900,000, due to higher fuel prices affecting the aviation industry.
The move also left third quarter figures down sharply as Santander booked a 472 million euro (pounds 413 million) bad debt provision.
Losses of pounds 585million, increase in bad debt provision - on the face of it bad news.
He also revealed that bad debt provision charges had fallen from 0.
projections for the bad debt provision required for the second half and
The results were helped by a drop in bad debt provision to $17m from the $34m it set aside in the third quarter of last year.
Lancaster Colony Corporation (Nasdaq: LANC) today reported record high sales and earnings for the third fiscal quarter ended March 31, 2000, before a one-time pretax bad debt provision of approximately $5 million.
The Terex Construction segment incurred charges in the quarter related to physical inventory results at four locations of approximately $4 million, additional inventory valuation charges of approximately $6 million, and an increased bad debt provision largely related to customers of the compact construction business of approximately $4 million.