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19 Cards in this Set

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  • Back
Accounts receivable turnover rate
A ratio used to measure the liquidity of accounts receivable and the reasonableness of the accounts receivable balance. Net sales/average receivables
Aging the accounts receivable
The process of classifying accounts receivable by age groups such as current, past due, etc. A step in estimating the uncollectible portion of A/R.
Allowance for Doubtful Accounts
A valuation account or contra-asset account relating to accounts receivable and showing the portion of the receivables estimated to be uncollectible.
Bank reconciliation
An analysis that explains the difference between the balance of cash shown in the bank statement and the balance of cash shown in the depositors records.
cash equivalents
Very short-term investments that are so liquid that they are considered equivalent to cash. Ex: T-Bills, CDs, etc.
cash management
Planning, controlling and accounting for cash transactions and cash balances.
compensating balance
A minimum average balance that a bank may require a borrower to leave on deposit in a non-interest-bearing account.
Failure to pay interest or principal of a promissory note at the due date.
Direct write-off method
A method of accounting for uncollectible receivables in which no expense is recognized until individual accounts are determined to be worthless. The account receivable is written off with an offsetting debit to uncollectible accounts expense. Used primarily for tax accounting
Transactions in which a business either sells its A/R to a financial institution or borrows money by pledging its A/R as collateral.
Fair value accounting
THe balance sheet valuation standard applied to investments in marketable securities. Involves adjusting the securities to market value at each balance sheet date. (exception to the cost principle)
Financial assets
Cash & assets convertible directly into known amounts of cash (such as marketable securities & receivables)
An increase in Owners' equity resulting from a transaction other than earning revenue or investment by the owners. Ex: sale of an asset above book value
Line of credit
A prearranged borrowing agreement in which a bank stands ready to advance the borrower w/out delay any amount up to a specified limit. Once used it becomes a liability.
A decrease in owners' equity resulting from any transaction other than an expense or a distribution to the owners. Ex: sale of an asset below book value
marketable securities
Highly liquid investments, primarily in stocks & bonds, that can be sold at quoted market prices in organized securities exchanges.
net realizable value
The balance sheet valuation standard applied to receivables. Equal to the gross amount of accounts and notes receivable, less estimated uncollectibles
NSF check
A customer's check that was deposited but returned b/c of lack of funds in the account on which it was drawn.
Unrealized Holding Gain (or loss) on investments
A stockholders' equity account representing the difference between the cost of investments owned and their market value at the balance sheet date. Gains or losses on investments that have not been realized through sale.