Accounts Receivable and Bad Debts Expense(Flashcards)

These receipts result in a credit to Accounts Receivable when customers pay for the goods or services they had received on credit.

This is the title to the contra account associated with Accounts Receivable. It reports the anticipated amount of the receivables that will not be collected.

This is the normal ending balance for the general ledger account Accounts Receivable.

This is the expected ending balance for the general ledger account Allowance for Doubtful Accounts.

This procedure sorts the amounts owed to a company by its customers and by the dates when the sales invoices are or were due.

This metric results when 365 or 360 days is divided by the accounts receivable turnover ratio.

This ratio is the result of dividing a company’s credit sales for a year by the average balance in Accounts Receivable during the year.

When this method for reporting bad debts expense is used, a contra asset account is not used. Instead, Bad Debts Expense is debited when a bad account is written off.

Under this method, Bad Debts Expense is debited and a contra asset account is credited. When a bad account is written off, the contra asset account is debited.

This term indicates that ownership of goods will transfer to the buyer when the goods reach the buyer’s location.

This term indicates that ownership of goods will transfer to the buyer when the goods leave the seller’s warehouse.

This invoice term indicates that the net amount (after any returns or allowances) is due within 30 days. However, 2% can be deducted if paid within 10 days.

This invoice term indicates that the net amount (after any returns or allowances) is due within 30 days. However, 1% can be deducted if paid within 10 days.

This reduction to a distributor’s published price will vary according to the customer’s volume of purchases.

This discount (often for 1% or 2% of the amount owed) is offered by some companies if their sales invoices are paid within 10 days instead of 30 days.

This action by a borrower gives its lender a lien on the borrower’s accounts receivable until the borrower repays a loan.

This occurs when a company sells its accounts receivable to another party. The sale may be with or without recourse.

This general ledger account is a contra account to Sales and is debited when customers return goods or are given a reduction in the amount they were billed.

When computing bad debts expense, this method focuses on the amount of bad debts expense that will be reported on the income statement.

When computing bad debts expense, this method focuses on the amount to be reported as the ending balance in the Allowance for Doubtful Accounts.

This term describes a general ledger account that has a subsidiary ledger with the supporting amounts.

These accounts provide the details for the summary amounts found in a general ledger control account.

Pertaining to accounts receivable, this is the amount that is expected to be collected. It is the debit balance in Accounts Receivable minus the credit balance in Allowance for Doubtful Accounts.

The routine adjusting entry that credits Allowance for Doubtful Accounts also includes a debit to this account.

When an uncollectible account receivable is written off, this account will be credited.