Chapter 9 Terms Flashcards
Accounts Receivable Turnover
A measure of the liquidity of accounts receivable; computed by dividing net credit sales by average net accounts receivable
Accounts Receivable
Accounts owed by customers on account
Aging the Accounts Receivable
The analysis of receivable balances by the length of time they have been unpaid
Allowance Method
A GAAP method of accounting for uncollectibles that involves estimating uncollectible accounts at the end of each period
Average Collection Period
The average amount of time that a receivable is outstanding; calculated by dividing 365 days by the accounts receivable turnover
Bad Debt Expense
An expense account to record uncollectible receivables
Cash (Net) Realizable Value
The net amount a company expects to receive in cash
Direct Write-off Method
A non-GAAP method of accounting for uncollectibles that involves expensing accounts at the time they are determined to be uncollectible
Dishonored (Default) Note
A note that is not paid in full at maturity
Factor
A finance company or bank that buys receivables from businesses and then collects the payments directly from the customers
Maker
The party in a promissory note who is making the promise to pay
Other Receivables
Various forms of non-trade receivables, such as interest receivable and income tax refundable
Notes Receivable
Written promises (as evidenced by a formal instrument) for amounts to be received
Payee
The party to whom the payment of a promissory note is to be made
Percentage-of-receivables Basis
A method by which management estimates what percentage of receivables will result in losses from uncollectible accounts
