Unit 14 Flashcards
creating the estimated value of uncollectible accounts to a contra account
allowance method
the difference between an asset’s account balance and its related contra-account balance
book value
the difference between the balance of accounts receivable and its contra account, allowance for uncollectible accounts
book value of accounts receivable
the amounts of accounts receivable a business expects to collect
net realizable value
a method used to estimate uncollectible accounts receivable that assumes a percent of credit sales will become uncollectible
percent of sales method
a method used to estimate uncollectible accounts receivable that uses an analysis of accounts receivable to estimate the amount that will be uncollectible
percent of accounts receivable method
analyzing accounts receivable according to when they are due
aging of accounts receivable
canceling the balance of a customer account because the customer does not pay
writing off an account
a written and signed promise to pay a sum of money at a specific time
promissory note
a promissory note signed by a business and given to a creditor
note payable
a promissory note that a business accepts from a person or business
note receivable
the person or business that signs the note, thus promises to make payment
maker of a note
the person or business to whom the amount of a note is payable
payee
the original amount of a note, sometimes referred to as the face amount
principal
the percentage of the principal that is due for the use of the funds secured by the note
interest rate
