ACC 201 ch 5

Card Set Information

ACC 201 ch 5
2012-05-16 00:03:44
Receivables Sales

Show Answers:

  1. Accounts receivable p. 214
    The amount of cash owed to the company by its customers from the sale of products or services on account.
  2. Aging method p. 227
    Using a higher percentage for “old” accounts than for “new” accounts when estimating uncollectible accounts.
  3. Allowance for uncollectible accounts p. 222
    Contra asset account representing the amount of accounts receivable that we do not expect to collect.
  4. Allowance method p. 220
    Recording an adjustment at the end of each period to allow for the possibility of future uncollectible accounts. The adjustment has the effects of reducing assets and increasing expenses.
  5. Average collection period p. 237
    Approximate number of days the average accounts receivable balance is outstanding. It equals 365 divided by the receivables turnover ratio.
  6. Bad debt expense p. 221
    The amount of the adjustment to the allowance for uncollectible accounts, representing the cost of estimated future bad debts charged to the current period.
  7. Contra revenue account p. 216
    An account with a balance that is opposite, or “contra,” to that of its related revenue account.
  8. Credit sales p. 214
    Transfer of products and services to a customer today while bearing the risk of collecting payment from that customer in the future. Also known as sales on account or services on account.
  9. Direct write-off method p. 230
    Recording bad debt expense at the time we know the account is uncollectible.
  10. Net accounts receivable p. 222
    The difference between total accounts receivable and the allowance for uncollectible accounts.
  11. Net realizable value p. 219
    The amount of cash the firm expects to collect.
  12. Net revenues p. 215
    A company's total revenues less any discounts, returns, and allowances.
  13. Notes receivable p. 232
    Formal credit arrangements evidenced by a written debt instrument, or note.
  14. Percentage-of-receivables p. 221
    method Method of estimating uncollectible accounts based on the percentage of accounts receivable expected not to be collected.
  15. Receivables turnover ratio p. 237
    Number of times during a year that the average accounts receivable balance is collected (or “turns over”). It equals net credit sales divided by average accounts receivable.
  16. Sales allowance p. 217
    Seller reduces the customer's balance owed or provides at least a partial refund because of some deficiency in the company's product or service.
  17. Sales discount p. 215
    Reduction in the amount to be paid by a credit customer if payment on account is made within a specified period of time.
  18. Sales return p. 217
    Customer returns a product.
  19. Trade discount p. 215
    Reduction in the listed price of a product or service.
  20. Uncollectible accounts p. 220
    Customers' accounts that no longer are considered collectible.