Chapter 9 Accounting Vocab

Front 1

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

Back 1

Accounts Receivable

Front 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.

Back 2

Accounts receivable turnover

Front 3

The process of analyzing the accounts receivable and classifying them according to various age groupings, with the due date being the base point for determining age.

Back 3

Aging the receivables

Front 4

The contra asset account for accounts receivable.

Back 4

Allowance for doubtful accounts

Front 5

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

Back 5

Allowance method

Front 6

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

Back 6

Bad debt expense

Front 7

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

Back 7

Direct write-off method

Front 8

A note that the maker fails to pay on the due date.

Back 8

Dishonored note receivable

Front 9

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

Back 9

Maturity value

Front 10

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

Back 10

Net realizable value

Front 11

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

Back 11

Notes Receivable

Front 12

The relationship between sales and accounts receivable, computed by dividing the net accounts receivable at the end of the year by the average daily sales.

Back 12

Number of days' sales in receivables

Front 13

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

Back 13

Receivables