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The McGraw-Hill 36-Hour Course: Finance for Non-Financial Managers 3/E, 3rd Edition by Robert Cooke, Susan Shelly, H. George Shoffner

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You may also hear the term reserve for bad debts. This is an obsolete term. The reason: many people interpreted the term “reserve” to be akin to such as “oil reserves”; i.e., “reserve” meant there was money in the bank to cover losses from deadbeat customers just as surely as there is oil in the ground to provide future needs. As we have discussed, that is not the case.

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