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Chapter 8 vocab
| Term | Definition |
|---|---|
| accounts receivable | an asset; a claim against the customer created by selling merch or services on credit |
| accounts receivable turnover | a measure of how frequently during the year accounts receivable are being converted to cash =DIVIDE(sales/average accounts receivable) |
| aging the receivables | the process of analyzing the receivables and classifying them into various age groupings |
| allowance for doubtful accounts | a contra asset account for accounts receivable where the estimate for uncollectible accounts when using the allowance method |
| allowance method | method of accounting for uncollectible receivables that recognizes an expense by estimating future uncollectible accounts |
| bad debt expense | the operating expense incurred because of the failure to collect receivables |
| days' sales in receivable | an estimate of the length of time the accounts receivable have been outstanding =DIVIDE(average accounts receivable/ average daily sales) |
| direct write-off method | the method of accounting for uncollectible receivables that recognizes an expense only when an account is deemed to be worthless |
| dishonored note receivable | a note that the maker fails to pay on the due date |
| maturity value | the amount that is due at the due date =SUM(face value + interest) |
| net realizable value | the value of the receivables reduced to the amount that is expected to be collected =DIFFERENCE(accounts receivable - allowance for doubtful accounts) |
| notes receivable | a customer's written promise to pay an amount and possibly an interest at an agreed upon rate |
| receivables | all money claims against other entities |
Created by:
hellocookies
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