It stands for bad debt reserve; a contra asset that represents management’s estimate of the amount of accounts receivable (A/Rs) that will not be paid back by the debtors (and hence become bad debts). The reserve (also, a provision or allowance) is set aside to cover uncollectible debts (receivables, notes, loans, etc.) in case customers (in credit sales) default on their payments. In that sense, this reserve is used as a tool to control the potential risks associated with an entity’s loans and credit sales.
BDR may also denote before debt ratio or book debt ratio.
Comments