Term
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Definition
| Receivables created by selling merchandise or services on credit. |
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Term
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Definition
| The process of analyzing the accounts receivable and classifying them according to various age groupings, with the due date being the base point for determining age. |
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Term
| Allowance for Doubtful Accounts |
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Definition
| The contra asset account for accounts receivable. |
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Term
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Definition
| The method of accounting for uncollectible accounts that provides an expense for uncollectible receivables in advance of their write-off. |
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Term
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Definition
| The method of inventory costing that is based upon the assumption that costs should be charged against revenue by using the weighted average unit cost of the items sold. |
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Term
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Definition
| The operating expense incurred because of the failure to collect receivables. |
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Term
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Definition
| The cost of the manufactured product sold. |
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Term
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Definition
| The method of accounting for uncollectible accounts that recognizes the expense only when accounts are judged to be worthless. |
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Term
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Definition
| The cost of finished products on hand that have not been sold. |
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Term
| First-in, first-out (fifo) method |
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Definition
| A method of inventory costing based on the assumption that the costs of merchandise sold should be charged against revenue in the order in which the costs were incurred. |
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Term
| Last-in, first-out (lifo) method |
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Definition
| A method of inventory costing based on the assumption that the most recent merchandise inventory costs should be charged against revenue. |
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Term
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Definition
| A financial reporting rule requiring a firm that elects to use lifo inventory valuation for tax purposes to also use lifo for external financial reporting. |
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Term
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Definition
| A required disclosure for lifo firms, showing the difference between inventory valued under fifo and inventory valued under lifo. |
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Term
| Lower-of-cost-or-market (LCM) method |
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Definition
| A method of valuing inventory that reports the inventory at the lower of its cost or current market value (replacement cost). |
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Term
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Definition
| The cost of materials that have not yet entered into the manufacturing process. |
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Term
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Definition
| The amount that is due at the maturity or due date of a note. |
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Term
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Definition
| Merchandise on hand (not sold) at the end of an accounting period. |
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Term
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Definition
| For a receivable, the amount of cash expected to be realized in the future. For inventory, the estimated selling price of an item of inventory less any direct costs of disposal, such as sales commissions. |
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Term
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Definition
| Written claim against debtors who promise to pay the amount of the note plus interest at an agreed-upon rate. |
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Term
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Definition
| All money claims against other entities, including people, business firms, and other organizations. |
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Term
| Work in process inventory |
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Definition
| The direct materials costs, the direct labor costs, and the factory overhead costs that have entered into the manufacturing process but are associated with products that have not been finished. |
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