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allowance for doubtful accounts

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Allowance for Doubtful Accounts
An estimation made by a company and documented on its balance sheet for receivables that might go uncollected.

Notes:
It is standard practice for a company to have funds set aside for money that cannot be collected.


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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5 million its allowance for doubtful accounts to $3.
Net income for the fourth quarter of 2006 includes a $107,000 gain resulting from the reversal of the allowance for doubtful accounts, and a $101,000 expense for stock compensation related to the exercising of stock options and the adoption of a new accounting standard, FAS-123R.
0 million increase to the allowance for doubtful accounts, the Company changed its methodology for estimating its allowance for doubtful accounts effective September 30, 2006, as follows: The Company will reserve a percentage, of all self-pay accounts receivable without regard to aging category, based on collection history adjusted for expected recoveries and, if present, other changes in trends.
 
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