ACC 120 – Essential Vocabulary Study Sheet

A complete set of vocabulary flashcards covering key technical accounting terms across Receivables, Inventory, Long-Term Operational Assets, and Liabilities from ACC 120.

Allowance Method

Estimating how much money customers will not pay before knowing exactly which customers won't pay.

Allowance for Uncollectible Accounts

A contra-asset account that reduces accounts receivable by the amount expected to go unpaid.

Percent of Receivables Method

Estimates the required ending allowance balance using a percentage of accounts receivable.

Write-Off

Removing a customer's account when the company determines it will not be collected.

Net Realizable Value (NRV)

The amount of accounts receivable a company actually expects to collect.

Notes Receivable

A written promise that another party will repay money, usually with interest.

Accrued Interest

Interest that has been earned or incurred but has not yet been received or paid.

Net Sales

Sales revenue after subtracting sales returns, allowances, and discounts.

Sales Allowance

A price reduction given to a customer because of a problem with merchandise they keep.

Purchase Discount

A reduction in inventory cost for paying a supplier early.

Freight-In

Transportation costs paid to get purchased inventory ready for sale. Included in inventory cost.

Cost of Goods Sold (COGS)

The cost of inventory that has been sold.

FIFO

First In, First Out. Assumes the oldest inventory costs are sold first.

LIFO

Last In, First Out. Assumes the newest inventory costs are sold first.

Gross Margin

Net sales minus COGS.

Operating Income

Profit earned from a company's main business operations before nonoperating items.

Multiple-Step Income Statement

An income statement that separates operating and nonoperating activities.

Capitalization

Recording a purchase or expenditure as an asset instead of immediately recording an expense.

Market Basket Purchase

Buying multiple assets together for one combined price.

Relative Fair Value

The proportion of each asset's fair value used to divide a combined purchase price.

Straight-Line Depreciation

Spreading an asset's depreciable cost equally across its useful life.

Accumulated Depreciation

The total depreciation recorded on an asset since it was placed into service.

Book Value

Original asset cost minus accumulated depreciation.

Salvage Value

The estimated value of an asset at the end of its useful life.

Goodwill

An intangible asset arising when a business is purchased for more than the fair value of its identifiable net assets.

Amortization

Spreading the cost of a limited-life intangible asset over its useful life.

Impairment Loss

A loss recorded when an asset's carrying amount must be reduced under accounting rules.

Contingent Liability

A possible obligation that depends on an uncertain future event.

Warranty Liability

The estimated amount a company expects to owe for future warranty claims.

Installment Note Payable

A loan repaid through scheduled payments that include principal and interest.

Amortization Schedule

A table showing how loan payments are divided between principal and interest.

Current Portion of Long-Term Debt

The amount of long-term debt principal that must be repaid within the upcoming year or applicable operating cycle.

Bond Discount

The difference when a bond is sold for less than its face value.

Stated Interest Rate

The interest rate written in a bond agreement, used to calculate cash interest payments.

Market Interest Rate

The rate of return investors currently require on comparable bonds.

Bond Carrying Value

The amount at which a bond liability is currently recorded on the balance sheet.

Straight-Line Bond Amortization

Spreading a bond discount equally over its interest periods.