Flashcards in CH9 - Receivables Deck (12):
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.
accounts receivable turnover
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.
aging the receivables
The contra asset account for accounts receivable.
Allowance for Doubtful Accounts
The method of accounting for uncollectible accounts that provides an expense for uncollectible receivables in advance of their write-off.
The operating expense incurred because of the failure to collect receivables.
bad debt expense
The method of accounting for uncollectible accounts that recognizes the expense only when accounts are judged to be worthless.
direct write-off method
A note that the maker fails to pay on the due date.
dishonored note receivable
The amount that is due at the maturity or due date of a note.
The estimated selling price of an item of inventory less any direct costs of disposal, such as sales commissions.
net realizable value
A customer's written promise to pay an amount and possibly interest at an agreed-upon rate.
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.
number of days' sales in receivables