Chapter 7: Accounts Receivable

These flashcards cover key concepts related to accounts receivable, their management, and financial reporting.

Accounts Receivable

Amounts owed by customers for goods sold by the company on credit.

Allowance for Doubtful Accounts

A contra account that estimates the portion of accounts receivable that will not be collectible.

Bad Debt Expense

The cost of selling on credit, recorded in the same period as the related revenue.

Net Realizable Value of A/R

The amount that accounts receivable are expected to be collected, after accounting for uncollectible amounts.

Accounts Receivable (Allowance for Doubtful Accounts)

The presentation on the balance sheet showing the gross accounts receivable minus the allowance for doubtful accounts.

Aging of A/R

A method to estimate uncollectible receivables based on the age of accounts.

Percentage of Final A/R Balance

A method to estimate uncollectible receivables based on historical data as a percentage of the total accounts receivable.

Write Off of A/R

The process of removing an accounts receivable from the books when deemed uncollectible.

Outstanding Receivables as Percentage of Net Sales

A calculation of accounts receivable as a percentage of net credit sales.

Days Sales in Accounts Receivable

The average number of days that receivables are outstanding, calculated by multiplying the percentage of outstanding receivables by 365.