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Loan Agreement A written contract between a lender and a borrower that sets out the rights and obligations of each party regarding a specified loan. Loss Reserves That portion of a fund's earnings or permanent capital designated by the board of directors as a reserve against possible loan losses and, as such, unavailable for lending purposes.
Generally accepted accounting principles governing for-profit and regulated financial institutions require that loan loss suing for unpaid personal loan be deducted as an annual expense on an accrual basis and that the loan loss reserve be shown as a contra asset reducing loan assets.
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