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