Term
| states that financial statements or the explanatory notes and schedules that go with the statements must disclose all relevant data about the financial position of a company |
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Definition
| adequate disclosure principle |
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Term
| interest deducted in advance by a bank |
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Definition
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Term
| a 360-day year used by many companies and financial institutions for ease in calculation of interest; also referred to as the commercial year |
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Definition
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Term
| a possible liability, such as on a discounted note of a customer, that may become a real liability if certain events occur |
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Definition
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Term
| the allowance of cash, goods, or services in the present, with payment expected in the future |
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Definition
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Term
| the time from the date of discounting a customer's note until the due date of the note; also referred to as term of discount |
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Definition
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Term
| the act of borrowing from a bank on one's own note with the interest being deducted at the time of borrowing |
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Definition
| discounting a note payable |
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Term
| a note that is not paid by its maker on the due date |
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Definition
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Term
| the date on which a note must be paid; also referred to as the maturity date |
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Definition
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Term
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Definition
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Term
| The act of issuing a note to a creditor in return for an extension of time to pay an existing account payable |
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Definition
| issuing a note on account |
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Term
| The person who has received credit and issues a note |
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Definition
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Term
| the principal plus the interest on a note; the amount that must be paid to the payee on the maturity date of the note |
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Definition
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Term
| able to be transferred by endorsement to another party |
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Definition
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Term
| a note that has no interest charge |
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Definition
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Term
| an expense, such as interest expense, that is not related to the day-to-day operations of the business |
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Definition
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Term
| revenue, such as interest income, that is earned from a source other than the normal operations of the business |
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Definition
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Term
| the amount of money borrowed or the amount of credit extended; also referred to as the face value |
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Definition
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Term
| the difference between the maturity value of a discounted note and the bank discount charged |
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Definition
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Term
| a written promise to pay a sum of money at a definite time in the future; also referred to as a note |
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Definition
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Term
| a fee charged by a bank to the payee of a note when the note is dishonored by its maker |
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Definition
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Term
| the annual percent charged on the principal |
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Definition
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Term
| the number of years, months, or days for which a note is issued; also referred to as the term |
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Definition
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Term
| a schedule in which accounts receivable are grouped into age categories and an estimated bad debts rate is applied to each age category |
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Definition
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Term
| a way of estimating bad debts expense when using the balance sheet approach |
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Definition
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Term
| a contra -asset account used to record the estimated amount of uncollectible accounts; also referred to as the Allowance for Bad Debts account or the Allowance for Uncollectible Accounts account |
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Definition
| Allowance for Doubtful Accounts account |
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Term
| a method of accounting for bad debts in which the amount estimated to be uncollectible is established at the end of an accounting period and recorded in an adjusting entry |
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Definition
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Term
| an account receivable that for one reason or another cannot be collected; also referred to as an uncollectible account |
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Definition
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Term
| an operating expense account used to record losses from uncollectible receivables; also referred to as the Uncollectible Accounts Expense |
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Definition
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Term
| a method of estimating the bad debts expense under the allowance method in which the expense is based on aging the accounts receivable; also referred to as the percent of receivables approach |
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Definition
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Term
| a method of accounting for bad debts in which the expense is recorded only when a customer's account is determined to be uncollectible; also referred to as the direct charge-off method |
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Definition
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Term
| a method of estimating the bad debts expense under the allowance method in which the expense is based on a percent of credit sales; also referred to as the percentage of sales method |
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Definition
| income statement approach |
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Term
| the difference between the balance in the Accounts Receivable account and the Allowance for Doubtful Accounts account; the actual amount of receivables that the firm expects to collect; also referred to as net receivables |
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Definition
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Term
| a miscellaneous revenue account used to record the amount of a bad debt recovered in a period after the period in which the account was written off |
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Definition
| Recovery of Bad Debts account |
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Term
| to reopen a customer's account that was previously written off as uncollectible |
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Definition
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Term
| an act passed by Congress in 1986 to simplify the income tax code, broaden the tax base, and eliminate many tax shelters |
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Definition
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Term
| a business or person accepting possession but not title of goods to sell for others on a commission basis |
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Definition
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Term
| a procedure in which one business (the consignee) accepts goods from another business (the consignor) for sale on a commission basis; goods acquired on consignment should be counted in the inventory of the consignor |
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Definition
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Term
| a business or person delivering goods to a consignee to be sold on a commission basis |
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Definition
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Term
| the accounting principle that requires a firm to continue to use a method once chosen, rather than switch from method to method arbitrarily or for temporary advantage |
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Definition
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Term
| in the retail method, the dollar value of goods available for sale at cost divided by the dollar value of goods available for sale at retail |
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Definition
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Term
| the amount found by multiplying the unit cost of an item by the quantity |
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Definition
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Term
| an inventory costing method that assumes the first goods purchased (first-in) are the first goods sold (first-out), leaving the most recent goods purchased as the ending inventory |
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Definition
| first-in, first-out (FIFO) method |
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Term
| a method for estimating the cost of the ending inventory by using a modified version of the cost of goods sold formula |
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Definition
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Term
| financial statements, such as a balance sheet and an income statement, that are prepared for a period of time less than a fiscal year |
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Definition
| interim financial statements |
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Term
| a form on which a physical inventory is recorded |
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Definition
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Term
| an inventory costing method that assumes the last goods purchased (last-in) are the first goods sold (first-out), leaving the earliest goods as the ending inventory |
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Definition
| last-in, first-out (LIFO) method |
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Term
| an alternate way to value an inventory in which the cost of the merchandise on hand is compared with the market price (current cost to replace), and the lower value is used |
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Definition
| lower of cost or market (LCM) rule |
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Term
| goods held for sale to customers in the normal course of business merchandise |
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Definition
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Term
| the average cost method applied to the perpetual inventory system; a new average unit cost is calculated each time an item is purchased |
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Definition
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Term
| an inventory system in which the Merchandise Inventory account shows the value of the most recent inventory count, usually at the beginning of the accounting period; no attempt is made to adjust the balance of this account until the next inventory is taken |
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Definition
| periodic inventory system |
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Term
| records used in the perpetual system to record purchases and sales of an item of inventory and to keep a running balance of that item |
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Definition
| perpetual inventory records |
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Term
| an inventory system in which the Merchandise Inventory account is debited each time merchandise is purchased and credited each time merchandise is sold in order to keep a running balance of the entire inventory |
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Definition
| perpetual inventory system |
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Term
| a count of merchandise on hand at the end of a period |
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Definition
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Term
| a method for estimating the cost of the ending inventory by using a cost percentage derived from cost and retail prices of the goods available for sale |
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Definition
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Term
| an inventory costing method in which units are identified as coming from specific purchases and are assigned a cost based on the price of those purchases |
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Definition
| specific identification method |
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Term
| an inventory costing method in which it is assumed that all units have the same average price; calculated by dividing the total cost of goods available for sale by the total units available for sale; also referred to as the average cost method |
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Definition
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