| Accounts receivable | Amounts due from customers for credit sales; backed by the customer's general credit standing.
|
 |
|
|
| Accounts receivable turnover | Measure of both the quality and liquidity of accounts receivable; indicates how often receivables are received and collected during the period; computed by dividing net sales by average accounts receivable.
|
|
|
|
| Aging of accounts receivable | Process of classifying accounts receivable by how long they are past due for purposes of estimating uncollectible accounts.
|
|
|
|
| Allowance for Doubtful Accounts | Contra asset account with a balance approximating uncollectible accounts receivable; also called Allowance for Uncollectible Accounts.
|
|
|
|
| Allowance method | Procedure that (a) estimates and matches bad debts expense with its sales for the period and/or (b) reports accounts receivable at estimated realizable value.
|
|
|
|
| Bad debts | Accounts of customers who do not pay what they have promised to pay; an expense of selling on credit; also called uncollectible accounts.
|
|
|
|
| Direct write-off method | Method that records the loss from an uncollectible account receivable at the time it is determined to be uncollectible; no attempt is made to estimate bad debts.
|
|
|
|
| Interest | Charge for using money (or other assets) loaned from one entity to another.
|
|
|
|
| Maker of the note | Entity who signs a note and promises to pay it at maturity.
|
|
|
|
| Matching principle | Prescribes expenses to be reported in the same period as the revenues that were earned as a result of the expenses.
|
|
|
|
| Materiality constraint | Prescribes that accounting for items that significantly impact financial statement and any inferences from them adhere strictly to GAAP.
|
|
|
|
| Maturity date of a note | Date when a note's principal and interest are due.
|
|
|
|
| Payee of the note | Entity to whom a note is made payable.
|
|
|
|
| Principal of a note | Amount that the signer of a note agrees to pay back when it matures, not including interest.
|
|
|
|
| Promissory note (or note) | Written promise to pay a specified amount either on demand or at a definite future date; is a note receivable for the lender but a note payable for the lendee.
|
|
|
|
| Realizable value | Expected proceeds from converting an asset into cash.
|