allowance for doubtful accounts

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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 ?
It added however that it did acknowledge the bank's solid liquidity cushion and stronger capital.
The stable outlook reflects Maalot assessment that the cash from the owned projects, together with the liquidity cushion, will be resilient in the short term to potential changes in regulation in Italy and Spain, and to the uncertainty regarding the time and magnitude of receipts from the Dorad power plant (" Dorad ").
2%), which was mainly driven by an increase in the CBR key refinancing rate and further growth in the Group s liquidity cushion against higher uncertainty in the operating and geopolitical environment.
ILFC plans to use the proceeds for general corporate purposes, including purchasing aircraft and supporting the companyas liquidity cushion.
075 billion outstanding, leaving a little less than $2 billion to act as a liquidity cushion for both the corporate stabilization fund and the share insurance fund.
Standard and Poor has stated that the outlook on Telefonica (NYSE: TEF) is negative because of a possible one notch downgrade in 2013 or 2014 in case of a weakening in the current liquidity cushion.
Banks across the globe are facing pressure on their capitals, which is a liquidity cushion essential to absorb shock such as the 2008-09 global crisis, euro zone debt woes and in some cases such as Russia - a rapid growth in lending.
In addition, SAN Chile has significantly reduced refinancing risk and exposure to more price-sensitive deposits by building a liquidity cushion while maintaining access to local capital markets without any apparent rise in funding costs"
This, in our view, indicates banks' persistent caution towards new lending while conveying their desire to preserve a comfortable liquidity cushion.
5%, bringing the total liquidity cushion to 7% of assets and liabilities.
The investment portfolio also envisages additional precaution measures as liquidity cushion to fully satisfy needs of the Development Fund in liquid funds at any time.
Although the Company believes it has sufficient liquidity to complete its exit from the Chapter 11 reorganization process without the need for this DIP commitment, this additional show of support by the lenders provides the Company with an important liquidity cushion that will further assure the Company's successful reorganization.