Chapter 8 Vocabulary Flashcards Preview

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Flashcards in Chapter 8 Vocabulary Deck (13):
1

accounts receivable

The subsidiary ledger containing the individual accounts with suppliers (creditors).

2

account form

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.

3

aging the receivables

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.

4

Allowance for Doubtful Accounts

The contra asset account for accounts receivable.

5

allowance method

The method of accounting for uncollectible accounts that provides an expense for uncollectible receivables in advance of their writeoff.

6

bad debt expense

The operating expense incurred because of the failure to collect receivables.

7

direct write-off method

The method of accounting for uncollectible accounts that recognizes the expense only when accounts are judged to be worthless.

8

dishonored note receivable

A note that the maker fails to pay on the due date.

9

maturity value

The amount that is due at the maturity or due date of a note.

10

net realizable value

The estimated selling price of an item of inventory less any direct costs of disposal; such as sales commissions.

11

notes receivable

A customer’s written promise to pay an amount and possibly interest at an agreed-upon rate.

12

number of days’ sales in receivables

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.

13

receivables

All money claims against other entities; including people; business firms; and other organizations.