allowance for doubtful accounts

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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.
References in periodicals archive ?
At least one or more of the new board members might advocate for GE to raise equity capital and provide for a more apt liquidity cushion given the company's "current cash squeeze and significant balance sheet risks," including $37B of long-term debt maturities at GE Capital over the next three years, Inch tells investors in a research note.
On February 7, 2018, Qazaq Banki's liquidity cushion was very low, at about 1.
2x liquidity cushion to operating expenses, after the payment of principal and interest on outstanding debt.
All of these transactions were initiated by SoftBank Group in order to generate proceeds that will be used to increase SoftBank's liquidity cushion, improve its leverage ratio and enable flexible and prudent financial management for SoftBank, Alibaba added.
Although an increase in government securities would normally result in an increase in the banks' liquidity cushion, this push is occurring at a time when the credit quality of the Omani government (A3 review for downgrade) may weaken.
The partnership with Trafigura further strengthens our balance sheet by improving our bottom-line netbacks, reducing oil marketing risks, and providing a bigger and more solid liquidity cushion.
It added however that it did acknowledge the bank's solid liquidity cushion and stronger capital.
Moody's Interfax notes that although Kedr Bank's liquidity cushion as of
ILFC plans to use the proceeds for general corporate purposes, including purchasing aircraft and supporting the companyas liquidity cushion.
075 billion outstanding, leaving a little less than $2 billion to act as a liquidity cushion for both the corporate stabilization fund and the share insurance fund.
Standard and Poor has stated that the outlook on Telefonica (NYSE: TEF) is negative because of a possible one notch downgrade in 2013 or 2014 in case of a weakening in the current liquidity cushion.
Banks across the globe are facing pressure on their capitals, which is a liquidity cushion essential to absorb shock such as the 2008-09 global crisis, euro zone debt woes and in some cases such as Russia - a rapid growth in lending.