Chapter 6: Accounts Receivable

Question 1

Account Receivable

Answer 1

a customer to whom inventory has been sold on credit, and the amount still owing for those sales

Question 2

Credit Sale

Answer 2

a transaction that involves buying inventory on credit, with the provision of the inventory on one date followed by the receipt of cash at a later date

Question 3

Sales Invoice

Answer 3

a source document used to verify a credit sale of inventory to an accounts receivable

Question 4

Sales Return

Answer 4

A return from by a customer (Accounts Receivable) of inventory sold on credit

Question 5

Discount Expense

Answer 5

an expense incurred in the form of a decrease in assets (Accounts Receivable) and owner’s equity, incurred when cash is received early from Accounts Receivable and a settlement discount is allowed

Question 6

Accounts Receivable Turnover

Answer 6

The average number of days it takes for a business to receive cash from its Accounts Receivable

Question 7

Accounts Receivable Ageing Analysis

Answer 7

A listing of the amount and proportion of accounts receivable according to the length of time they are owing