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Receivables in Accounting Flashcards

Receivables in Accounting Flashcards
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Historic Warranty Expense Percentage
This is the amount spent in the past when replacing or repairing goods after customers return them.
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Receivables Management
This involves tracking what a business's customers have purchased on credit. It tells businesses who owes them money, who pays their bills on time and who is late on payments.
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Banker's Year
A year with 360 days that is used by most bankers when calculating time for interest payments. For example, if you have a loan due in 60 days, you would find time with the calculation 60/360.
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How to determine interest on a loan
Interest = principle (how much you borrowed) x rate (interest rate) x time (from when you signed the note to your maturity date)
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Note Receivable
A promise, or loan, set up between a borrower and a lender to give the borrower money for a certain amount of time. At the end of the time, the borrower must pay back the money plus interest.
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Factoring
A transaction businesses can use to transform receivables to cash before they're payable. This involves selling your receivables to an outside party. You must sell the receivables at a discount.
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Receivable
This is money owed to someone that hasn't been paid yet. Businesses might get this when they sell items on credit.
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Accounts Receivable Account
An account that records changes to accounts receivable. The balance decreases when customers make payments and increases when credit sales occur.
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17 cards in set

Flashcard Content Overview

This set of flashcards can help you review the accounts receivable account, the bad debt expense account and the allowance for doubtful accounts. You'll find cards that address realized and realizable revenue. Warranty expenses and uncollectable accounts will also be covered. These cards can help you go over notes receivable and how interest is calculated on loans.

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Accounts Receivable Account
An account that records changes to accounts receivable. The balance decreases when customers make payments and increases when credit sales occur.
Receivable
This is money owed to someone that hasn't been paid yet. Businesses might get this when they sell items on credit.
Factoring
A transaction businesses can use to transform receivables to cash before they're payable. This involves selling your receivables to an outside party. You must sell the receivables at a discount.
Note Receivable
A promise, or loan, set up between a borrower and a lender to give the borrower money for a certain amount of time. At the end of the time, the borrower must pay back the money plus interest.
How to determine interest on a loan
Interest = principle (how much you borrowed) x rate (interest rate) x time (from when you signed the note to your maturity date)
Banker's Year
A year with 360 days that is used by most bankers when calculating time for interest payments. For example, if you have a loan due in 60 days, you would find time with the calculation 60/360.
Receivables Management
This involves tracking what a business's customers have purchased on credit. It tells businesses who owes them money, who pays their bills on time and who is late on payments.
Historic Warranty Expense Percentage
This is the amount spent in the past when replacing or repairing goods after customers return them.
Historic Warranty Expense
We use this term when discussing the costs related to service and warranty that we think we'll need to pay for a particular batch of a product.
Expected Uncollectable Accounts
The amount of funds you expect customers not to pay. You find this by taking your total sales and multiplying them by the average number of uncollectable accounts.
Uncollectable Accounts
These are accounts that a company can't collect because customers either won't or can't pay them off.
Allowance for Doubtful Accounts
An account that serves as an offset to a company's accounts receivable account.
Bad Debt Expense Account
This account records the amount of uncollectable accounts receivable that developed during a specific accounting period.
Realized Revenue
This is revenue that we get when we exchange a service or product and receive cash in return.
Realizable Revenue
A type of revenue that we get when we provide a service or product for payment that we expect to get later.
Earned Revenue
We use this term to denote that we have performed a service or exchanged goods.
Criteria for Recognizing Revenue

Record revenue when it's realized

The manner of revenue generation needs to be complete or near complete

Costs for revenue generation have to be reported with revenue

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