Term
|
Definition
| Amounts customers owe on account. |
|
|
Term
| Aging the accounts receivable |
|
Definition
| A schedule of customer balances classified by the length of time they have been unpaid. |
|
|
Term
|
Definition
| A method of accounting for bad debts that involves estimating uncollectible accounts at the end of each period. |
|
|
Term
| Average collection period |
|
Definition
| The average amount of time that a receivable is outstanding, calculated by dividing 365 days by the receivables turnover ratio. |
|
|
Term
|
Definition
| An expense account to record losses from extending credit. |
|
|
Term
| Cash (net) realizable value |
|
Definition
| The net amount a company expects to receive in cash from receivables. |
|
|
Term
| Concentration of credit risk |
|
Definition
| The threat of nonpayment from a single large customer or class of customers that could adversely affect the financial health of the company. |
|
|
Term
|
Definition
| A method of accounting for bad debts that involves charging receivable balances to Bed Debts Expense at the time receivables from a particular company are determined to be uncollectible. |
|
|
Term
|
Definition
| A note that is not paid in full at maturity. |
|
|
Term
|
Definition
| A finance company or bank that buys receivables from businesses for a fee and then collects the payments directly from the customers. |
|
|
Term
|
Definition
| The party in a promissory note who is making the promise to pay. |
|
|
Term
|
Definition
| Claims for which formal instruments of credit are issued as evidence of the debt. |
|
|
Term
|
Definition
| The party to whom payment of a promissory note is to be made. |
|
|
Term
| Percentage of receivables basis |
|
Definition
| A method of estimating the amount of bad debts expense whereby management establishes a percentage relationship between the amount of receivables and the expected losses from uncollectible accounts. |
|
|
Term
|
Definition
| A written promise to pay a specified amount of money on demand or at a definite time. |
|
|
Term
|
Definition
| Amounts due from individuals and companies that are expected to be collected in cash. |
|
|
Term
| Receivables turnover ratio |
|
Definition
| A measure of the liquidity of receivables, computed by dividing net credit sales by average net accounts receivables. |
|
|
Term
|
Definition
| Notes and accounts receivable that result from sales transactions. |
|
|
