Doubtful Debt Reserve
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 money to allow a reduction in the accounts receivable ledger due to non-collection of debts. This can also be referred to as an allowance for bad debts. Once a doubtful debt becomes uncollectable, the amount will be written off.
Read more about this topic: Bad Debt
Famous quotes containing the words doubtful, debt and/or reserve:
“Has it ever occurred to you that friendship, at best, is a rather doubtful asset? I don’t want friends. I shall have worshippers and followers. People who will obey me because they recognize my greatness. Those who are loyal will be rewarded, and the others—destroyed.”
—Lester Cole (1904–1985)
“A good debt is not as good as no debt.”
—Chinese proverb.
“Common experience is the gold reserve which confers an exchange value on the currency which words are; without this reserve of shared experiences, all our pronouncements are cheques drawn on insufficient funds.”
—René Daumal (1908–1944)