Accounting Final

Front 1

account receivable

Back 1

A claim against the customer created by selling merchandise or services on credit.

Front 2

accounts receivable turnover

Back 2

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.

Front 3

Allowance for Doubtful Accounts

Back 3

The contra asset account for accounts receivable.

Front 4

allowance method

Back 4

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

Front 5

bad debt expense

Back 5

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

Front 6

direct write-off method

Back 6

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

Front 7

maturity value

Back 7

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

Front 8

net realizable value

Back 8

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

Front 9

notes receivable

Back 9

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

Front 10

receivables

Back 10

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

Front 11

accelerated depreciation method

Back 11

A depreciation method that provides for a higher depreciation amount in the first year of the asset’s use, followed by a gradually declining amount of depreciation.

Front 12

amortization

Back 12

The periodic transfer of the cost of an intangible asset to expense.

Front 13

book value

Back 13

The cost of a fixed asset minus accumulated depreciation on the asset.

Front 14

capital expenditures

Back 14

The costs of acquiring fixed assets, adding to a fixed asset, improving a fixed asset, or extending a fixed asset’s useful life.

Front 15

capital leases

Back 15

Leases that include one or more provisions that result in treating the leased assets as purchased assets in the accounts.

Front 16

copyright

Back 16

An exclusive right to publish and sell a literary, artistic, or musical composition.

Front 17

depletion

Back 17

The process of transferring the cost of natural resources to an expense account.

Front 18

depreciation

Back 18

The systematic periodic transfer of the cost of a fixed asset to an expense account during its expected useful life.

Front 19

double-declining-balance method

Back 19

A method of depreciation that provides periodic depreciation expense based on the declining book value of a fixed asset over its estimated life.

Front 20

fixed asset turnover ratio

Back 20

The number of dollars of sales that are generated from each dollar of average fixed assets during the year, computed by dividing the net sales by the average net fixed assets.

Front 21

fixed assets

Back 21

Long term or relatively permanent tangible assets such as equipment, machinery, and buildings that are used in the normal business operations and that depreciate over time.

Front 22

goodwill

Back 22

An intangible asset that is created from such favorable factors as location, product quality, reputation, and managerial skill.

Front 23

intangible assets

Back 23

Long-term assets that are useful in the operations of a business, are not held for sale, and are without physical qualities.

Front 24

operating leases

Back 24

Leases that do not meet the criteria for capital leases and thus are accounted for as operating expenses.

Front 25

patents

Back 25

Exclusive rights to produce and sell goods with one or more unique features.

Front 26

residual value

Back 26

The estimated value of a fixed asset at the end of its useful life.

Front 27

revenue expenditures

Back 27

Costs that benefit only the current period or costs incurred for normal maintenance and repairs of fixed assets.

Front 28

straight-line method

Back 28

A method of depreciation that provides for equal periodic depreciation expense over the estimated life of a fixed asset.

Front 29

trademark

Back 29

A name, term, or symbol used to identify a business and its products.

Front 30

units-of-production method

Back 30

A method of depreciation that provides for depreciation expense based on the expected productive capacity of a fixed asset.