Chapter 8 Vocabulary Flashcards
accounts receivable
The subsidiary ledger containing the individual accounts with suppliers (creditors).
account form
The relationship between net sales and accounts receivable; computed by dividing the net sales by the average net accounts receivable; measures how frequently during the year the accounts receivable are being converted to cash.
aging the receivables
The process of analyzing the accounts receivable and classifying them according to various age groupings; with the due date being the base point for determining age.
Allowance for Doubtful Accounts
The contra asset account for accounts receivable.
allowance method
The method of accounting for uncollectible accounts that provides an expense for uncollectible receivables in advance of their writeoff.
bad debt expense
The operating expense incurred because of the failure to collect receivables.
direct write-off method
The method of accounting for uncollectible accounts that recognizes the expense only when accounts are judged to be worthless.
dishonored note receivable
A note that the maker fails to pay on the due date.
maturity value
The amount that is due at the maturity or due date of a note.
net realizable value
The estimated selling price of an item of inventory less any direct costs of disposal; such as sales commissions.
notes receivable
A customer’s written promise to pay an amount and possibly interest at an agreed-upon rate.
number of days’ sales in receivables
The relationship between sales and accounts receivable; computed by dividing the net accounts receivable at the end of the year by the average daily sales.
receivables
All money claims against other entities; including people; business firms; and other organizations.
