Chapter 7 Flashcards
Receivable
Amount due from another party
Notes Receivable
An asset consisting of a written promise to receive a definite sum of money on demand or on specific future dates
Account Receivable
Amounts due from customers for credit sales
An accounts receivable ledger:
is a supplementary record to maintain an account for each customer.
records journal entries that affect accounts receivable.
The Direct- write-off
The __ method of accounting for bad debts records the loss from an uncollectible account receivable when it is determined to be uncollectible. No attempt is made to predict bad debt expenses.
Realizable value
The expected proceeds from accounts receivable, determined by taking accounts receivable less the allowance for doubtful accounts,
Allowance for Doubtful Accounts
Contra asset account with a balance approximating uncollectible accounts receivable; also called Allowance for Uncollectible Accounts.
Aging of accounts receivable
Process of classifying accounts receivable by how long they are past due for purposes of estimating uncollectible accounts.
The aging of accounts receivable method is one of the ways of computing the adjusting entry under the allowance method. The other way of computing the adjusting entry is based on percent of sales.
Aging of accounts receivable (2)
The Blank______ method, also referred to as balance sheet method, uses balance sheet relations to estimate bad debts—mainly, the relationship between accounts receivable and the allowance account.
Promissory note
Written promise to pay a specified amount of money
Principal
Amount that the signer agrees to pay back, not including interest
Interest
Charge from using money loaned from one entity to another
Maker
One who signed the note and promised to pay at maturity
Payee
The person to whom the note is payable
Maturity Date
Day that the principal and interest must be paid
