Accounting Principles Review

These flashcards cover key vocabulary and concepts related to accounting principles as discussed in the lecture notes.

Accounts Payable

A liability account that represents money owed by a business to its suppliers.

Interest Expense

The cost incurred by an entity for borrowed funds.

Aging of Receivables

A process that categorizes accounts receivable based on the length of time an invoice has been outstanding.

Allowance for Doubtful Accounts

A contra account used to estimate the portion of accounts receivable that may not be collectible.

Estimated Percent of Revenue

A method used to predict the amount of future revenue based on historical data and trends.

Journal Entry

A record of a financial transaction in the accounting books.

Write Off

The removal of an uncollectible account from the accounts receivable.

Credit Balance

An amount that exceeds the debits in a ledger account, indicating a surplus.

Debit Entry

An entry on the left side of an account that signifies the addition of an asset or expense.

Lender

An individual or entity that provides funds to another with the expectation of being paid back, typically with interest.

Estimated Write Off

An accounting estimate of the amount of accounts receivable that will not be collected.

Specific Write Off

The process of removing a specific uncollectible account from the accounts receivable.

Credit Heavy

A situation where credit balances in accounts exceed the debit balances.

Estimation Method

A technique used to approximate unpaid debts or future sales based on data analysis.

Receivables Approach

A method that utilizes the aging of accounts receivable to determine necessary adjustments in allowance accounts.

Interest Calculation

A mathematical determination of the amount of interest due based on principal, rate, and time.

Account Reconciliation

The process of ensuring that two sets of records (usually the balances of two accounts) are in agreement.

Unadjusted Balance

The original balance of an account before any adjustments are made.

Financial Statement

Formal records that outline the financial activities of a business.

Revenue Recognition

The accounting principle that outlines the conditions under which revenue is recognized.

Credit Risk

The risk of loss due to a borrower's failure to repay a loan.