Etymology
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allowance (n.)

late 14c., "praise" (a sense now obsolete), from Old French aloance "sanction, granting, allocation," from aloer "allot, apportion, assign" (see allow). As with allow, the English word involves senses of two different French words.

Meaning "sanction, approval, tolerance" is from 1550s. Sense of "a sum allotted to meet expenses" is from c. 1400. In accounts, meaning "a sum placed to one's credit" is attested from 1520s. Mechanical meaning "permissible deviation from a standard" is from 1903. To make allowances is literally to add or deduct a sum from someone's account for some special circumstance; figurative use of the phrase is attested from 1670s.

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Definitions of allowance
1
allowance (n.)
an amount allowed or granted (as during a given period);
my weekly allowance of two eggs
travel allowance
a child's allowance should not be too generous
allowance (n.)
a sum granted as reimbursement for expenses;
allowance (n.)
an amount added or deducted on the basis of qualifying circumstances;
an allowance for profit
Synonyms: adjustment
allowance (n.)
a permissible difference; allowing some freedom to move within limits;
Synonyms: leeway / margin / tolerance
allowance (n.)
a reserve fund created by a charge against profits in order to provide for changes in the value of a company's assets;
Synonyms: valuation reserve / valuation account / allowance account
allowance (n.)
the act of allowing;
He objected to the allowance of smoking in the dining room
2
allowance (v.)
put on a fixed allowance, as of food;
From wordnet.princeton.edu