Chapter 8

Question 1

Ratio that measures the number of times the company collects the average accounts receivable in a year

Answer 1

Accounts Receivable Turnover Ratio

Question 2

Tells if a company could pay all liabilities if immediately due

Answer 2

Acid-Test Ratio

Question 3

Method of estimating uncollectible receivables by determining the balance of Allowance for Bad Debts based on the age of individual accounts receivable

Answer 3

Aging-of-Receivables Method

Question 4

Contra account related to accounts receivable that holds the estimated amount of uncollectible accounts

Answer 4

Allowance for Bad Debts

Question 5

Method of accounting for uncollectible receivables where the company estimates bad debt expense

Answer 5

Allowance Method

Question 6

Cost to the seller of extending credit that arises from failure to collect any credit owed by customers

Answer 6

Bad Debt Expense

Question 7

Ratio that determines how many days it takes to collect the average levels of accounts receivable

Answer 7

Days’ sales in Receivables

Question 8

Party to a credit transaction that takes on an obligation/payable

Answer 8

Debtor

Question 9

Method of accounting for uncollectible receivables where bad debt expense is recorded when a customer’s account receivable is uncollectible

Answer 9

Direct Write-off Method

Question 10

Failure of a note’s maker to pay a note receivable at maturity

Answer 10

Dishonor a Note

Question 11

Revenue to the payee for loaning money, expense to the debtor

Answer 11

Interest

Question 12

Period of time where interest is computed. extends from the original date of the note to maturity date

Answer 12

Interest Period

Question 13

Percentage rate of interest specified by the note

Answer 13

Interest Rate

Question 14

Date when the note is due

Answer 14

Maturity Date

Question 15

Sum of the principle plus interest due at maturity

Answer 15

Maturity Value

Question 16

Net value a company expects to collect from its accounts receivable. Accounts Receivable-Allowance for Bad Debts

Answer 16

Net Realizable Value

Question 17

Method of estimating uncollectible receivables by determining the Allowance for Bad Debts account based on a percentage of accounts receivable

Answer 17

Percent-of-Receivables Method

Question 18

Method of estimating uncollectible receivablews that calculates bad debt expense based on a percentage of net credit sales

Answer 18

Percentage-of-Sales-Method

Question 19

Amount loaned out by the payee and borrowed by the maker of the note

Answer 19

Principle

Question 20

Monetary claim against a business or an individual

Answer 20

Receivable