Chapter 7 Terminology

Question 1

Accounts receivable

Answer 1

Amounts due from customers for credit sales.

Question 2

Bad debts

Answer 2

When a company grants credit to customers, it expects some customers won’t be able to pay what they promised.

Question 3

The _______ records the loss from an in collectible account receivable when it is determined to be in collectible.

Answer 3

Direct write-off method.

Question 4

The ________ for bad debts matched the estimated loss from uncollectible accounts receivable against the sales they helped produce.

Answer 4

Allowance method

Question 5

This is a contra account.

Answer 5

Allowance for doubtful accounts.

Question 6

The amount expected to be received is the…

Answer 6

Realizable value

Question 7

The ________ is the day the note (principal and interest) must be repaid.

Answer 7

Maturity date of a note

Question 8

_______ measures how often, on average, receivables are collected during the period.

Answer 8

Accounts receivable turnover