Accounting 2 - Chapter 3
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12 terms
Terms | Definitions |
|---|---|
 Aging of Accounts Receivable Method | A method of estimating the uncollectble amount in which each customer's account is examined and aged and each age group total is multiplied by a percentage deemed uncollectible |
| Allowance Method | A method of accounting for uncollectible accounts in which the business makes an adjustment at the end of the period for the estimated uncollectible amount |
| Book Value of Accounts Receivable Method | The amount a business can reasonably expect to collect from its charge customers (AR - Allowance) |
| Direct Write-Off Method | A method of accounting for uncollectible accounts in which the uncollectible amount is removed from the accounts receivable subsidiary ledger and from the controlling account when the business's management decides that the account is not going to be paid |
| Installment Sales | A sale in which the customer makes a cash down payment and a series of equal monthly payments |
| Marketable Securities | Short-term investments that usually include government securities such as Treasury bills and the securities of large corporations |
| Matching Principle | An accounting principle that states that revenue for a fiscal period must be matched against the expenses incurred in earning that revenue during the period |
| Other Revenue | Non-operating revenue; revenue a business receives or earns from activities outside its normal operations |
| Percentage of Net Sales Method | A method of estimating the uncollectible amount in which the net sales amount for the period is multiplied by a certain set percentage |
| Petty Cash Fund | An amount of cash on hand used to make small cash payments |
| Publicly Held Corporation | A corporation whose stock is widely held, has a large market, and is usually traded on a stock exchange |
| Uncollectible Accounts | An account receivable that cannot be collected |
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