reserve for bad debts


Also found in: Acronyms.

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.

reserve for bad debts

References in periodicals archive ?
Nathan Bailey, Vice President and Controller added, "Despite the reserve for bad debts recorded at September 30, the Company still reported net income for the sixteenth consecutive quarter since the move to Pampa in September of 2000.
25 million increase in the reserve for bad debts related to a specific major account during the third quarter, we are pleased with the overall operations of the company.
The Company's existing Reserve for Bad Debts may materially increase in the current and future periods due to increasing sales based on higher fuel prices and will depend upon actual experience.
Among other things, the charge provides for accelerated global manufacturing facility consolidations, accelerated global systems' initiatives including year 2000 compliance, elimination of unprofitable non-strategic product lines and an increase in the company's reserve for bad debts to conservatively reflect the increased provider credit risk caused by recently enacted Medicare reimbursement cuts which become effective January 1, 1998.
This charge was primarily attributable to an increase in reserve for bad debts, the write-down of certain deferred offering costs, the reduction of the accrual for unbilled revenues and change in the accrual for claims against other carriers.
During 1996, there were additional reasons for the operating losses which include expenses for the introduction of a management process into the company, a reserve for bad debts and amortization expenses related to components and expired kits.
In the second quarter of 1996, there were additional reasons for the operating losses which include expenses for the introduction of a management process into the company, a reserve for bad debts and amortization expenses related to components and expired kits.
Results for fiscal 1996 include a charge of $1,409,375 associated with loan costs and interest expense related to debt financing completed during fiscal 1996 and a charge of $663,421 associated with reserve for bad debts from the company's former distributor.
The company indicated that its second quarter results may be further impacted if management concludes that an increased reserve for bad debts or a reserve for restructuring charges are appropriate.
The increases in 1995 consolidated net income over that reported by the Association for comparable periods in 1994 were primarily attributable to increases in 1995 net interest income after provision for loan losses which was due in large part to increases in the excess of average interest-earning assets over interest-bearing liabilities during the 1995 periods as compared to 1994 and due to the third quarter 1994 recording of a nonrecurring deferred income tax charge of $673,000 related to the Association's recapture of its excess tax basis reserve for bad debts.