Chapter 5 words

Question 1

Notes receivable `

Answer 1

longer term and accure intrest

Question 2

Net realizable value

Answer 2

Amount actually expected to be collected

Question 3

allowance for doubtful accounts

Answer 3

uncollectable accounts that are estimated

Question 4

uncollectable accs expense

Answer 4

expense associated with uncollectable accounts estimated by taking % of revenue or % of recivables

Question 5

percent of revenues methods

Answer 5

based on historical experience, economic conditions, credit policies

Question 6

Contra asset account

Answer 6

account- minus another account

Question 7

reinstate

Answer 7

recording a previously written off receivable

Question 8

percent of receivables method

Answer 8

using % of outstanding receivables method

Question 9

aging accounts receivable

Answer 9

amount of days outstanding is used to develop estimate of the amount of allowance for doubtful accounts

Question 10

promissory note what does it detail

Answer 10

document representing credit agreement
maker-person responsible for making payaments
Pagee- creditor/lendor
Principal- amount of money loaned Interest- annual % of principal amount
Maturity date- date the maker must repay bill
Collateral- assigned as security to ensure principal and interest

Question 11

Accrued interest

Answer 11

Interest needed to be collected

Question 12

Specific identification

Answer 12

inventory method that allocates costs between COGS and ending inventory

Question 13

FIFO

Answer 13

cost of items purchased first to be assigned to cog

Question 14

LIFO

Answer 14

cost of item purchased last to be assigned to COG

Question 15

Weighted average

Answer 15

Cost flow method: total $ of inventory/total units

Question 16

When to use FIFO

Answer 16

If cost of inventory is increasing

Question 17

When to use LIfo

Answer 17

If cost of inventory is decreasing