Chapter 8

Question 1

Accounts receivable

Answer 1

Amount due from customers for credit sales also referred to as trade receivables

Question 2

Accounts receivable approach

Answer 2

A method of estimating bad debts using balance sheet relationships. Also known as the balance sheet approach

Question 3

Accounts receivable ageing analysis

Answer 3

The process of classifying accounts receivable in terms of how long they have been outstanding for the purpose of estimating the amount of uncollectable accounts

Question 4

Accounts receivable turnover

Answer 4

A measure of both of the quality and the liquidity Of accounts receivable: it indicates how often on average receivables are received and collected during the period: calculated by dividing credit sales or net sales by the average accounts receivable balance

Question 5

Allowance for doubtful accounts

Answer 5

A contra asset account with a balance equal to the estimated amount of accounts receivable that will be uncollectible: also called the allowance for uncollectable accounts

Question 6

Allowance method of accounting for bad debts

Answer 6

And accounting procedure that one estimates and reports the bad debt expense from credit sales during the period of the sales and two reports accounts receivable as the amount of cash proceeds that are expected from their collection their estimatedRealizable value

Question 7

Bad debts

Answer 7

The accounts of customers who fail to pay what they have committed to pay at the time of the sale of goods or provision of service. It is the total dollar value of the unpaid accounts receivable balance. Once determined to be uncollectable the amount is booked as bad debt expense also called uncollectable accounts