Accounting for Receivables

These flashcards cover key terms and definitions related to accounting for receivables, as outlined in Chapter 7 of Financial and Managerial Accounting.

Accounts Receivable

Amounts due from customers for goods or services that have been delivered but not yet paid for.

Note Receivable

A written promise to pay a specified amount of money, usually with interest, either on demand or at a stated future date.

Direct Write-Off Method

An accounting method whereby bad debt expenses are recorded when specific accounts are determined to be uncollectible.

Allowance Method

An accounting method that estimates uncollectible accounts at the end of each period, allowing for a more accurate representation of accounts receivable.

Accounts Receivable Turnover

A financial ratio that measures how efficiently a company manages its accounts receivable, calculated by dividing net credit sales by average accounts receivable.

Bad Debts Expense

The expense associated with accounts receivable that are not expected to be collected.

Maturity Date

The date on which the principal and interest of a note must be paid.

Factoring Receivables

The process of selling accounts receivable to a third party at a discount to convert them into cash.

Pledging Receivables

Using accounts receivable as collateral for a loan.

Interest Revenue

Income earned from interest on loans or notes receivable.