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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 classic literature ?
As soon as the bridal party came in sight of La Reserve, M.
And that is all our English reserve is--a mere matter of training.
Before he could get to the end of the sentence Miss Jethro's agitation broke through her reserve.
We are born officers, and I reserve to myself no special credit for an early advancement in the service.
Have we sufficient reserve screen to permit us to make land, or, at least, meet our relief halfway?
I found him in the act of destroying the reserve instruments, and when I would have interfered to protect them he fell upon me and beat me.
All this time it had been impossible to work upon the damaged engines or the gravity-screen generators; but we had a full set of instruments upon the bridge, for Alvarez, after discovering my intentions, had fetched the reserve instruments from his own cabin, where he had hidden them.
Blanche answered again, with the same absence of reserve.
I believe I had no critical reserves in regard to them, but simply they did not take my fancy.
The role of the SDDC Reserve Component has changed drastically since 9-11," said Lt.
Hearing over his home police scanner a request for officer assistance regarding a traffic incident near his home, a reserve deputy sheriff quickly entered his vehicle and sped to the location despite icy road conditions.
To be sure, even a private reserve under such a regime would face the constant threat of nationalization or other interference.