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23 Cards in this Set
- Front
- Back
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operating activities
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transactions and events that involve selling products or services and incurring the necessary expenses associated with the primary activities of the business
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investing activities
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transactions and events that involve the purchase and sale of plant, equipment, and other assets not generally held for resale
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financing activities
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transactions and events whereby resources are obtained from or repaid to owners and creditors
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revenue recognition
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Process of recording revenue in the accounting records; occurs after 1-work has been substantially completed 2-cash collection is reasonably assured
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sales discount
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reduction in the selling price that is allowed if payment is received within a specific period
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contra account
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account that is offset or deducted from another account
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sales returns and allowances
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contra-revenue account in which the return of, or allowance for reduction in the price of, merchandise previously sold is recorded
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gross sales
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total recorded sales before deducting any sales discounts or sales return s and allownances
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net sales
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Gross sales less sales discounts and sales returns and allowances
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cash
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coins, currency, money orders, checks, and funds on deposit with financial institutions; most liquid of assets
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receivables
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claims for money, goods or services
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bad debt
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uncollectable account receivable
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direct write-off method
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recording of actual losses from uncollectable accounts as expenses during the period in which the AR are determined to be uncollectible.
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bad debt expense
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account that represents the portion of the current period's credit sales that are estimated to be uncollectible
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allowance method
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recording of estimated losses due to uncollectible accounts as expenses during the period in which the sales occured
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allowance for bad debts
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A contra account, deducted from AR, that shows the estimated losses from uncollectible accounts
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net realizable value of AR
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the net amount that would be received if all receivables considered collectible were collected;equal to total accounts receivable less the allowance for bad debts
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aging AR
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process of categorizing each AR by the number of days it has been outstanding
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AR turnover
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A measure used to indicate how fast a company collects its receivables; computed by dividing sales by average AR
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average collection period
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measure of the average number of days it takes to collect a credit sale; computed by dividing 365 days by AR turnover
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not sufficient funds(NSF) checks
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check that is not honored by a bank because of insufficient cash in the check writer's account
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bank reconciliation
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process of systematically comparing the cash balance as reported by the bank with the cash balance on the company's books and explaining any differences
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foreign currency transaction
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sale in which the price is denominated in a currency other than the currency of the seller's home country
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