Chapter 9: Accounting for Receivables

These flashcards cover key vocabulary and concepts related to Chapter 9: Accounting for Receivables.

Accounts Receivable

An amount due from another party for goods or services sold on credit.

Note Receivable

A written promise to pay a specified amount of money, usually with interest, at a designated future date.

Direct Write-Off Method

An accounting method to write off bad debts by directly reducing accounts receivable when they are deemed uncollectible.

Allowance Method

An accounting method to estimate uncollectible accounts and record bad debts expense in the same period as the related sales.

Maturity Date

The date when a note is due and payable.

Bad Debts Expense

The estimated loss from uncollectible accounts that is recognized in the accounting period in which the related sales occur.

Estimating Uncollectibles

The process of predicting the amounts of accounts receivable that are expected not to be collected.

Sales on Installment

Amounts owed by customers from credit sales where payment is made in periodic amounts over an extended time period.

Interest Computation

The calculation of interest based on the principal amount, interest rate, and time period.

Pledging Receivables

Using receivables as collateral to secure borrowing.