reserve

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Reserve

An accounting entry that properly reflects contingent liabilities.

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.

Reserves

reserve

The funds that are earmarked by a firm from its retained earnings for future use, such as for the payment of likely-to-be-incurred bad debts. The existence of such a reserve informs readers of the firm's financial statements that at least a part of the retained earnings will not be available to the stockholders. See also allowance for doubtful accounts, reserve for contingencies.
References in periodicals archive ?
We were using some reserve funds and we made some reductions at central office over the last two years, so we're sticking the course.
Besides allowing the city to partially repay investors out of the reserve fund, the resolution also will allow the city to issue future payments to bondholders whenever available amounts exceed $500,000.
As subordinate lien bonds matured, and the related reserve fund requirement declined, the authority expected to recover these balances.
The 'AAA' rating reflects the reserve funds as well as the additional credit enhancement provided to classes A-1 through A-7 by the subordination of the related class B certificates, with the reserve fund in the case of classes B-1 and B-4 being adequate to rate both A-1, B-1, A-4 and B-4 'AAA.
Balances in the general reserve fund at the end of the year will be rebated back to the participants.
The 'AAA' rating reflects the reserve funds as well as the additional credit enhancement provided to classes A-3 through A-6 by the subordination of the related class B certificates, with the reserve fund in the case of class B-4 being adequate to rate both A-4 and B-4 'AAA'.
Reserve funds are invested in short- to medium-term U.
All of these issues will require use of reserve funds if appropriations are not made by Sept.
With this issue, MWPAT is amending its SRF program structure by establishing bond-series-based debt service reserve funds instead of designating separate reserve fund accounts for each borrower.

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