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Chapter 14
| Term | Definition |
|---|---|
| Uncollectible accounts | Accounts receivable that cannot collected |
| Allowance method | Crediting the estimated value of uncollectible accounts to a contra account |
| Book value | The difference between an asset's account balance and its related contra account balance |
| Book value of Accounts Receivable | The difference between the balance of ACCOUNTS RECEIVABLE and its contra account, ALLOWANCE FOR UNCOLLECTIBLE ACCOUNTS |
| Net Realizable Value | The amount of accounts receivable a business expects to collect |
| Percent of Sales Method | assumes that a percent of credit sales will become uncollectible. |
| Percent of Accounts Receivable Method | uses an analysis of accounts receivable to estimate the amount that will be uncollectible |
| Aging of Accounts Receivable | Analyzing accounts receivable according to when they are due |
| Writing off an account | Canceling the balance of a customer account because the customer does not pay |
| Direct write-off method | Recording uncollectible account expenses only when an amount is actually known to be uncollectible |
| Promissory Note | A written and signed promise to pay a some of money at a specified time |
| Note Payable | A promissory note signed by a business and given to a creditor is entered into the books as a NOTE PAYABLE |
| Note Receivable | A Promissory note that a business accepts from a customer is entered in the business's books as a NOTE RECEIVABLE |
| Maker of a note | The person or business that signs a note, and thus promises to make payment |
| Payee | The person or business to whom the amount of a note is payable |
| Principal | The original amount of a note, some times referred to the face amount |
| Interest rate | The percent of the principle that is due for the use of the funds secured by a note |
| Maturity date | The date on which the principal is due to be repaid |
| Time of a note | The length of time from the signing date to the maturity date, usually expressed as the number of days, may be referred to as TIME OF A NOTE |
| Maturity value | The amount that is due on the maturity date of a note |
| Interest income | The interest earned on money loaned |
| Dishonored note | A note that is not payed when due. |
Created by:
andrew.v
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