An amount set aside as reserve for bad debts. In general, companies make an estimate of bad debt expenses that might be incurred in the current time period based on past records as part of the process of estimating earnings. Most companies keep a bad debt reserve in the expectation that some small percentage of their creditors will not pay them in full. If the bad debt reserve is accurately estimated, then a company's net income will not be reduced when the debts are actually written off as being uncollectable.
Related information about bad debt reserve:
- Bad debt - Wikipedia, the free encyclopedia
Also known as a bad debt reserve, this is a contra account listed within the current asset section of the balance sheet. The doubtful debt reserve holds a sum of ...
- Bad Debt Reserve Definition | Investopedia
An account set aside by a company to account for and offset losses that arise as a result of defaults from futures loans. This figure may be calculated based on ...
- How to Calculate Bad Debt Reserves
I recommend a three-pronged approach to establishing a bad debt reserve: A general reserve based on a percent of prior year sales. Example 2/10 of 1% of ...
- How Does a Bad Debt Reserve Hit a Profit & Loss Statement ...
Bad debts are accounts receivable that a small or large business can't collect. The allowance method is used to estimate bad debt reserves, which companies ...
- What is bad debt reserve? definition and meaning
Definition of bad debt reserve: An amount set aside as reserve for bad debts. ... If the bad debt reserve is accurately estimated, then a company's net income will ...
- Bad Debt Reserve - Financial Dictionary - The Free Dictionary
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 ...
- Allowance For Bad Debt: Definition from Answers.com
Provision for possible uncollectibility associated with accounts receivable. In the balance sheet, accounts receivable, representing gross receivables,
- Encyclopedia of Credit - Bad Debt Reserves
I recommend a three-pronged approach to establishing a bad debt reserve: A general reserve based on a percent of prior year sales. An example of a general ...