The following words and phrases were discussed in this chapter.
1. Notes receivable.
2. Cash (net) realizable value.
3. turnover.
4. Aging the accounts receivable.
5. Percentage-of-receivables basis.
6. Dishonored (defaulted) note.
7. Concentration of credit risk.
8. Allowance method.
9. Direct write-off method.
10. Factor.
Instructions
Match each word or phrase with its description below.
a. ________ Written promise (as evidenced by a formal instrument) for amounts to be received.
b. ________ A method of accounting for bad debts that involves estimating uncollectible accounts at the end of each period.
c. ________ A measure of the liquidity of computed by dividing net credit sales by average net accounts receivable.
d. ________ A method of accounting for bad debts that involves charging receivable balances to Bad Debt Expense at the time receivables from a particular company are determined to be uncollectible.
e. ________ A finance company or bank that buys receivables from businesses for a fee and then collects the payments directly from the customers.
f. ________ The net amount a company expects to receive in cash from receivables.
g. ________ The threat of nonpayment from a single large customer or class of customers that could adversely affect the financial health of the company.
h. ________ A note that is not paid in full at maturity.
i. ________ A method of estimating the amount of bad debt expense whereby management establishes a percentage relationship between the amount of receivables and the expected losses from uncollectible accounts.
j. ________ A schedule of customer balances classified by the length of time they have been unpaid.
