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Allowance for Doubtful Accounts
(redirected from Reserve for Loan Loss)

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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.
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The company's provision for loan losses in the third quarter was $990,000 compared to $453,000 in the third quarter a year ago which allows the company's reserve for loan loss level to keep pace with the rapid loan growth that the company has experienced.
Colony Bankcorp, Inc. Announces Third Quarter Results by PR Newswire
The Bank, which earned approximately $153 thousand for the quarter prior to the provision for loan losses, earned net income of $16 thousand for the last two months of the quarter after providing $119 thousand to the reserve for loan loss.
First Trust Bank Reports Second Quarter Results by PR Newswire
FORWARD LOOKING STATEMENTS This release contains various "forward looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which represents First Midwest's expectations and beliefs concerning future events including its provision and reserve for loan loss levels.
First Midwest Bancorp Reports Record Earnings: First Quarter up 12.8% by PR Newswire
 
 
 
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