allowance for doubtful accounts

(redirected from Provisions for Bad Debts)

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 ?
The bank had reported increasing non-performing loans and has been increasing provisions for bad debts.
Alpha Bank, Greece's fourth-largest lender by assets, swung to a loss in the final quarter of 2015 after it more than doubled its provisions for bad debts.
2 million net profit for 2014 despite the rise in provisions for bad debts.
The bank attributed the decline in profit to more normal levels of provisions for bad debts which started from the last quarter in 2013.
In the quarter ended December 31, 2013, the bank s provisions for bad debts and non-performing assets stood at ?
The 15-percent state-owned bank, whose provisions for bad debts fell 11 percent to a still-high 1.
Provisions for bad debts rose to AUD545m in the first fiscal quarter from AUD493m in the same period of the prior year largely due to the bank's underperforming UK business.
90), following indications from Emirates NBD management that inflated provisions for bad debts may be required.
The group was helped by a 35% reduction in provisions for bad debts to pounds 359m, and a cost-cutting drive saving around pounds 5m.
The group was helped by a 35% reduction in provisions for bad debts to pounds 359 million, as well as a cost-cutting drive saving around pounds 5 million.
The group was helped by a 35% reduction in provisions for bad debts to pounds 359m - as well as a cost-cutting drive saving about pounds 5m.
MUMBAI: ICICI Bank, India's second-biggest lender, said third-quarter profit rose 31 per cent to a record as loans increased and provisions for bad debts declined.

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