Business Glossary

1. acceptable reduction in quantity or quality such as normal spoilage in a manufacturing operation.
2. reduction in the amount owed a supplier because of damaged goods received or delays encountered.
3. valuation account reducing the cost of an asset such as the allowance to reduce marketable securities from cost to market value.

deduction from the value of an invoice, permitted by a seller of goods to cover damages or shortages.

In general: reduction in price.
Merchandising: reduction in price offered to a retailer by a manufacturer or wholesaler that is contingent upon some special arrangement. It usually compensates the retailer for expense incurred in marketing the product.See also brokerage allowance ; retail display allowance .

1. Accounting. An account for adjusting the value of an asset through charges to current income; a reserve for depreciation.
2. Banking. loan loss reserves for anticipated charge-off of bad debt.
3. Trusts. A probate court's award to a fiduciary, for example, a widow's allowance .

In general: reduction in price.
Merchandising: reduction in price offered to a retailer by a manufacturer or wholesaler that is contingent upon some special arrangement. It usually compensates the retailer for expense incurred in marketing the product. See also advertising allowance ; brokerage allowance ; display allowance ; retail display allowance .

an accounting term used on a financial statement or in a budget providing for an expectation of something that may occur.

Examples:

• allowance for vacancy and collection loss
• allowance for depreciation
• allowance for replacements