Term
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Definition
| Short-term financial assets that arise from sales on credit at the wholesale or retail level. |
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Term
| Accounts receivable aging method |
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Definition
| A method of estimating uncollectible accounts based on teh assumption that a predicatable proportion of each dollar of accounts receivable outstanding will not be collected. |
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Term
| Aging of accounts receivable |
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Definition
| The process of listing each customer's receivable account according to the due date of the account. |
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Term
| Allowance for Uncollectible Accounts |
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Definition
| A contra-asset account that reduces accounts receivable to the amount expected to be collected in cash. Also called Allowance for Doubtful Accounts and Allowances for Bad Debts. |
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Term
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Definition
| A method of accounting for uncollectible accounts by expensing estimated uncollectible accounts in the period in which the related sales take place. |
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Term
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Definition
| The process of accounting for the difference between the balance appearing on a compay's bank statement and the balance in its Cash account. |
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Term
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Definition
| Coins and currency on hand, checks and money orders from customers, and depostis in checking and savings accounts. |
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Term
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Definition
| Short-term investments that will revert to cash in 90 days or less from the time they are purchased. |
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Term
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Definition
| A minimum amount that a bank requires a company to keep in its bank account as part of a credit-granting arrangement. |
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Term
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Definition
| A potential liability that can develop into a real liability if a particular event occurs. |
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Term
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Definition
| A method of accounting for uncollectible accounts by directly debiting an expense account when bad debts are discovered; it violates the matching rule but is requred for computing federal income tax. |
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Term
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Definition
| A method of selling notes receivable to a bank in which the bank derives its profits by deducting the interest from the maturity value of the note. |
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Term
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Definition
| A promissory note that the maker cannot or will not pay at the maturity date. |
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Term
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Definition
| The time between a promissory note's issue date and its maturity date. |
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Term
| Electronic Funds Transfer (EFT) |
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Definition
| The transfer of funds from one bank to another through electronic communication. |
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Term
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Definition
| An entity that buys accounts receivable. |
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Term
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Definition
| The sale or transfer of accounts receivable. |
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Term
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Definition
| A system for controlling small cash disbursements by establishing a fund at a fixed amount and periodically reimbursing the fund by the amount necessary to restore its original cash balance. |
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Term
| Installment accounts receivable |
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Definition
| Accounts receivable that are payable in a series of time payments. |
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Term
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Definition
| The cost of borrowing money or the return on lending money, depending on whether one is the borrower or the lender. |
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Term
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Definition
| The date on which a promissory note must be paid. |
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Term
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Definition
| The total proceeds of a promissory note - face value plus interest - at the maturity date. |
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Term
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Definition
| Collective term for promissory notes owed by the entity (maker) who promises payment to other entities. |
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Term
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Definition
| Collective term for promissory notes held by the entity to whom payment is promised (payee). |
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Term
| Percentage of net sales method |
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Definition
| A method of estimating uncollectible accounts based on the assumption that a predictable proportion of each dollar of sales will not be collected. |
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Term
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Definition
| An unconditional promise to pay a definite sum of money on demand or at a future date. |
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Term
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Definition
| The grouping of receivables into batches for sales at a discount to companies and invetors. |
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Term
| Short-term financial assets |
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Definition
| Assets that arise from cash transactions, the investment of cash, and the extension of credit. |
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Term
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Definition
| Credit granted to customers by wholesalers or retailers. |
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Term
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Definition
| Accounts receivable owed by customers who cannot or will not pay. Also called bad debts. |
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Term
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Definition
A ratio that shows on average how long it takes to collect accounts receivable.
365 Days ÷ Receivable Turnover |
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Term
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Definition
A ratio for measuring the average number of times receivables are turned into cash during an accounting period;
Net Sales ÷ Average Accounts Receivable |
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