Chapter 7

Question 1

accounts receivable

Answer 1

Amounts due from customers from credits sales of products or services; “trade receivables”

Question 2

aging of accounts receivable

Answer 2

Analysis used to estimate the uncollectible accounts; involves stratification of receivables based upon age.

Question 3

allowance method for uncollectibles

Answer 3

A method that estimates uncollectibles as a portion of total receivables and establishes an offsetting contra allowance account.

Question 4

direct write-off method

Answer 4

A simple, non-GAAP, method that expenses uncollectible accounts only as they are determined to be uncollectible and are written off.

Question 5

dishonoring a note

Answer 5

To fail to pay a not at maturity

Question 6

interest

Answer 6

The charge imposed on the borrower of funds for the use of money.

Question 7

maker

Answer 7

The party creating a note and agreeing to make payment.

Question 8

maturity date

Answer 8

The date on which a note and related interest are due to be paid.

Question 9

maturity value

Answer 9

The amount due at maturity of a note; includes principal and interest.

Question 10

net realizable value

Answer 10

The amount of cash expected to be collected on outstanding accounts receivable; accounts receivable minus the allowance for uncollectibles.

Question 11

nontrade receivable

Answer 11

Amounts due from transactions and events not directly related to sales of products or services.

Question 12

notes receivable

Answer 12

A written promise from a client or customer to pay a definite amount of money on a specific future date.

Question 13

payee

Answer 13

The party to whom a not is made payable.

Question 14

principal

Answer 14

The basic stated amount of a note on which interest is usually calculated; generally relating to the amount borrowed.

Question 15

trade receivables

Answer 15

Amounts due from customers from credits sales of products or services.