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Financial Accounting 1 > Chapter 7 > Flashcards

Chapter 7 Flashcards

1
Q

Receivables

A

right to receive cash

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2
Q

trade receivables

A

owed by customers from revenue

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3
Q

non-trade receivables

A

other written promises. Loans to employees, dividends receivables, etcs

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4
Q

Bad Debt Expense

A

Bad debts expense is an estimate of what we think that we will not collect from the receivables. Before people tell us they can’t pay us.

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5
Q

Journal entry for Bad Debt expense?

A

DR Bad Debt expense (BDE)
CR Allowance for doubtful accounts (AFDA)(contra-asset)

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6
Q

Journal entry for “write-off”(when people tell us they can’t pay)

A

DR Allowance for doubtful account
CR Receivables

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7
Q

Journal entry if what was written-off is payed

A

DR Receivables
Cr AFDA
then
Dr Cash
Cr Receivables

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8
Q

Effective (or applied) interest rate

A

the rate actually earned
A.k.a. yield rate, market rate

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9
Q

Entries for receivables and interest at initiation

A

DR Notes receivables
CR Cash

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10
Q

Entries for receivables and interest as time passes

A

DR Notes Receivable
Cr interest income
(effective interest x Note receivable balance)

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11
Q

When interest is collected

A

Dr Cash
CR Notes Receivable

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12
Q

Face Value

A

principal amount received at maturity

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13
Q

Discount

A

lending out less than face value

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14
Q

Premium

A

lending out more than face value

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15
Q

Non (or zero) interest bearing

A

No periodic interest payments

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16
Q

Factoring

A

sell receivables to bank/finance company for fee and they collect if for you

17
Q

Recourse

A

buyer can come after seller if they cannot collect the receivables

18
Q

securitization

A

pool receivables and sell interest in them to third parties

19
Q

Sale

A

credit is to receivables

20
Q

Secured borrowing

A

Debit Cash
Credit is to payables

21
Q

Secured borrowing (definition)

A

pledge receivables as collateral to borrow money from creditor

22
Q

Assign/pledge:

A

provide receivables as security as loan, but receivables still under own control

Financial Accounting 1 (2 decks)

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