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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 ?
To ensure fairness, where possible, all owners and occupiers - both current and future - should contribute to the reserve fund equitably.
Rather than follow the literal and proper calculation of Total Price, sponsors may try to limit the amount of the reserve funds they deliver to condominiums by calculating Total Price based on the last discount price offered to tenants in occupancy instead of the actual last price.
We were using some reserve funds and we made some reductions at central office over the last two years, so we're sticking the course.
Martin said the reserve funds would enable PWRDF to honour its commitments to partners in case it loses funding from its donors.
Besides allowing the city to partially repay investors out of the reserve fund, the resolution also will allow the city to issue future payments to bondholders whenever available amounts exceed $500,000.
As subordinate lien bonds matured, and the related reserve fund requirement declined, the authority expected to recover these balances.
In the event of a default by TEAC that results in a draw on the debt service reserve fund (DSRF) below 60 days, TEAC or the trustee will request J.
The affirmation reflects the project's and single-family account's strong risk-to-capital ratios, high asset quality and liquidity of reserve fund investments, and substantial financial support from the state's mortgage recording tax surcharge receipts.
Interest earnings on MWPAT's substantial reserves, which come from reserve fund investment agreements meeting Fitch's 'AAA' investment guidelines, provide the remaining revenues to subsidize borrower costs.
The bond documents require the establishment of a primary reserve fund for each series of bonds equal to at least 10% of the original par amount of the loan.
The stress test considers loan quality, single-risk concentration, reserve fund size, and debt service requirements.

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