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38 Cards in this Set
- Front
- Back
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A method used to estimate uncollectible accounts receivable that assume a percent of credit sales will become uncollectible |
Percent of sales method |
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A method that uses an analysis of accounts receivable to estimate the amount that will be uncollectible |
Percent of accounts receivable method |
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Analyzing accounts receivable according to when they are due |
Aging of accounts receivable |
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The amount of accounts receivable a business expects to collect |
Net realizable value |
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The person or business to whom the amount of a note is payable |
Payee |
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The original amount of a note, sometimes referred to as the face amount |
Principal |
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The person or business that signs a note and thus promises to make payment |
Maker of a note |
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Crediting the estimated value of uncollectible accounts to a contra account |
Allowance method |
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The difference between the balance of Accounts Receivable and its contra account, Allowance for Uncollectible Accounts |
Book value of accounts receivable |
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The difference between an asset's account balance and its related contra account |
Book value |
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The amount that is due on the maturity date of a note |
Maturity value |
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The interest paid on money loaned |
Interest income |
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The date on which the principal of a note is due to be repaid |
Maturity date |
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A note that is not paid when due |
Dishonored note |
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A priomissory note that a business accepts from a customer |
Note receivable |
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The percentage of the principal that is due for the use of the funds secured by a note |
Interest rate |
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A written and signed promise to pay a sum of money at a specified time |
Promissory note |
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The length of time from the signing date of a note to the maturity date |
Time of a note |
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Canceling the balance of a customer account because the customer does not pay |
Writing off an account |
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The accounting concept Neutrality is applied when the process of making accounting estinates is free from bias |
T |
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The expense of an uncollectible account should be recorded in the accounting period that the account becomes uncollectible |
F |
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The percent of each age group of an accounts receivable that is expected to become uncollectible is determined by generally accepted accounting principles |
F |
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The adjusting entry for uncollectible accounts reduces the balance of the Accounts Receivable account |
F |
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A business having a $400 debit balance in Allowance for Uncollectible Accounts amd estimating its uncollectible accounts using accounts receivable aging to be $5,000 would record a $5,400 credit to Allowance for Uncollectible Accounts |
T |
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Interest rates are stated as a percentage of the principal |
T |
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The allowance method of accounting for uncollectible accounts does not comply with generally accepted accounting principles |
F |
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A business usually knows at the end of the fiscal year which customer accounts will become uncollectible |
F |
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A business usually knows at the end of the fiscal year which customer accounts will become uncollectible |
F |
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The account Allowance for Uncollectible Accounts is reported on the income statement |
F |
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Total assets are reduced when a business accepts a note receivable from a customer needing an extension of time to pay an account receivable |
F |
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The book value of accounts receivable must be a reasonable and unbiased estimate of the money the business expects to collect in the future |
T |
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When a customer account is written off under the allowance method, the book value of accounts receivable decreases |
F |
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When using the allowance method, writing off an uncollectible account does not change the net realizable value of accounts receivable |
T |
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The direct write-off method complies with generally accepted accounting principles |
F |
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The direct write-off method matches the expense of uncollectible accounts to the recenue that is earned in the same period |
F |
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A note provides the business with legal evidence of the debt should it be neccessary to go to court to collect |
T |
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Interest income is classified as revenue from normal operations |
F |
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The account Allowance for Uncollectible Accounts has a natural credit balance |
T |
