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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.



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 ?
The annual indexing of the low reserve tranche and the reserve requirement exemption amount is based on growth in net transaction accounts and total reservable liabilities, respectively, at all depository institutions between June 30, 2004, and June 30, 2005.
Black (1975) and Fabozzi and Thurston (1986) argue that the reserve requirement tax is passed on to depositors of reservable instruments in the form of lower yields.
First of all, payment of interest on Fed balances should improve the efficiency of the financial system by eliminating the penalty that currently exists for the use of means of payment (for example, checks drawn on reservable accounts) that result in increases in the balances that commercial banks must hold at the Fed.
Drivers can locate reservable stations, and then make, view and cancel a reservation directly from a smart phone.
The new facility will be multi - purpose : a golf course clubhouse and winter operations facility as well as reservable meeting space .
gov to offer more than 90,000 reservable sites and activities.
As part of the promotion, many locations are also offering discounts on the famous Hertz Collections of sporty, luxurious, family and environmentally friendly vehicles, which are reservable by make and model.
com: This Hoodoo Recreation Services site includes everything you need to know about every developed campsite in the Deschutes and Willamette National Forests, regardless of whether the site is reservable.
Depository institutions must also regularly submit deposit reports of their deposits and other reservable liabilities.
If booking through an agent, please note certain journeys are reservable, such as Glasgow to Aberdeen.
These annual adjustments, known as the low reserve tranche adjustment and the reservable liabilities exemption adjustment, are based on growth in net transaction accounts and total reservable liabilities, respectively, at all depository institutions between June 30, 2001, and June 30, 2002.
6) By lowering bank reserves, contractionary monetary policy reduces the extent to which banks can accept reservable deposits, if reserve requirements are binding.