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73 Cards in this Set
- Front
- Back
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accounts receivable
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amounts owed by customers on account
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accounts receivable turnover ratio
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a measure of the liquidity of accounts receivable; computed by dividing net credit sales by average net accounts receivable
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aging the accounts receivable
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the analysis of customer balances by the length of time they have been unpaid
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allowance method
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a method of accounting for bad debts that involves estimating uncollectible accounts at the end of each period
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average collection period
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the average amount of time that a receivable is outstanding; calculated by dividing 365 days by the accounts receivable turnover ratio
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bad debts expense
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an expense account to record uncollectible receivables
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cash (net) realizable value
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the net amount a company expects to receive in cash
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direct write-off method
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a method of accounting for bad debts that involves expensing accounts at the time they are determined to be uncollectable
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dishonored note
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a note that is not paid in full at maturity
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factor
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a finance company or bank that buys receivables from businesses and then collects the payments directly from the customers
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maker
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the party in a promissory note who is making the promise to pay
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notes receivable
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claims for which formal instruments of credit are issued as proof of the debt
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other receivables
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various forms of nontrade receivables, such as interest receivable and income taxes refundable
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payee
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the party to whom payment of a promissory note is to be made
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percentage-of-sales basis
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management estimates what percentage of credit sales will be uncollectable
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percentage-of-receivables basis
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management estimates what percentage of receivables will result in losses from uncollectable accounts
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promissory note
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a written promise to pay a specified amount of money on demand or at a definite time
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receivables
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amounts due from individuals and other companies
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trade receivables
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notes and accounts receivable that result from sales transactions
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accelerated-depreciation method
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depreciation method that produces higher depreciation expense in the early years than in the later years
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additions and improvements
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costs incurred to increase the operating efficiency, productive capacity, or useful life of a plant asset.
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amortization
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the allocation of the cost of an intangible asset to expense over its useful life in a systematic and rational manner
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asset turnover ratio
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a measure of how efficiently a company uses its assets to generate sales; calculated as net sales divided by average total assets
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capital expenditures
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expenditures that increase the company's investment in productive facilities
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copyright
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exclusive grant from the federal govt that allows the owner to reproduce and sell an artistic or published work
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declining-balance method
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depreciation method that applies a constant rate to the declining book value of the asset and produces a decreasing annual depreciation expense over the useful life of the asset
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depletion
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the allocation of the cost of a natural resource to expense in a rational and systematic manner over the resource's useful life
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depreciation
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the process of allocating to expense the cost of a plant asset over its useful life in a rational and systematic manner
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depreciable cost
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the cost of a plant asset less its salvage value
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franchise
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a contractual arrangement under which the franchisor grants the franchisee the right to sell certain products, provide specific services, or use certain trademarks or trade names, usually within a designated geographical area
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going-concer assumption
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states that the company will continue in operation for the forseeable future
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goodwill
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the value of all favorable attributes that relate to a business enterprise
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intangible assets
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rights, privleges, and competitive advantages that result from the ownership of long-lived assets that do not possess physical substance
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licenses
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operating rights to use public property, granted to a business enterprise by a covt agency
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materiality principle
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if an item would not make a difference in decision making, a company does not have to follow GAAP
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natural resources
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assets that consist of standing timber and underground deposits of oil,gas or minerals
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ordinary repairs
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expenditures to maintain the operating efficiency and productive life of the unit
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patent
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an exclusive right issued by the US patent office that enables the recipient to manufacture, sell, or otherwise control an invention for a period of 20 years from the date of the grant
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plant assets
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tangible resources that are used in the operations of the business and are not intended for sale to customers
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research and development costs
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expenditures that may lead to patents, copyrights, new processes, or new products
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revenue expenditures
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expenditures that are immediately charged against revenues as an expense
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salvage value
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an estimate of an asset's value at the end of its useful life
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straight-line method
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depreciation method in which periodic depreciation is the same for each year of the asset's useful life
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trademark
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a word, phrase, jingle, or symbol that identifies a particular enterprise or product
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units-of-activity method
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depreciation method in which useful life is expressed in terms of the total units of production or use expected from an asset
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useful life
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an estimate of the expected productive life, also called service life, of an asset
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bearer bonds
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bonds not registered
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bond certificate
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a legal document that indicates the name of the issuer, the face value of the bonds, and such other data as the contractual interest rate and maturity date of the bonds
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bond discount
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the amount by which a bond sells at less than its face value
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bond indenture
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a legal document that sets forth the terms of the bond issue
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bond premium
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the amount by which a bond sells above its face value
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bonds
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a form of interest-bearing notes payable issued by corporations, universities, and governmental entities
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callable bonds
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bonds that are subject to retirement at a stated dollar amount prior to maturity at the option of the issuer
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contractual interest rate
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rate used to determine the amount of interest the borrower pays and the investor receives
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convertible bonds
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bonds that permit bondholders to convert them into common stock at their option
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current liabilities
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debts that a company reasonably expects to pay from existing current assets within the next year or operating cycle
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current ratio
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a measure of a company's liquidity; computed as current assets divided by current liabilities
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debenture bonds
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bonds issued against the general credit of the borrower. (unsecured bonds)
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debt to total assets ration
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a solvency measure that indicates the perentage of total assets provided by creditors; computed as total debt divided by total assets
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face value
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amount of principal the issuer must pay at the maturity date of the bond
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long-term liabilities
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obligations expected to be paid after one year
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market interest rate
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the rate investors demand for loaning funds to the corporation
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mortgage bond
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a bond secured by real estate
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mortgage note payable
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a long-term note secured by a mortgage that pledges title to specific assets as security for a loan
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notes payable
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obligations in the form of written promissory notes
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registered bonds
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bonds issued in the name of the owner
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secured bonds
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bonds that have specific assets of the issuer pledged as collateral
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serial bonds
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bonds that mature in installments
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sinking fund bonds
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bonds secured by specific assets set aside to retire them
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term bonds
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bonds that mature at a single specified future date
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times interest earned ratio
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a solvency measure that indicates a company's abilitiy to meet interest payments; computed by dividing income before income taxes and interest expense by interest expense
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unsecured bonds
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bonds issued against the general credit of the borrower. Also called debenture bonds
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working capital
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a measure of a company's liquidity; computes as current assets minus current liabilities
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