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36 Cards in this Set
- Front
- Back
Accounts receivable
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short-term financial assets that arise from sales on credit at the wholesale or retail level.
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Accounts receivable aging method
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A method of estimating uncollectible accounts based on the assumption that a predictable proportion of each dollar of accounts receivable outstanding will not be collected.
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Aging of accounts receivable
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The process of listing each customer's receivable account according to the due date of the account.
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Allowance for Uncollectible Accounts
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A contra-asset account that reduces accounts receivable to the amount expected to be collected in cash. Also called Allowance for Doubtful accounts and Allowance for Bad Debts.
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Allowance method
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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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Available-for-sale securities
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Debt and equity securities that do not meet the criteria for either held-to-maturity or trading securities.
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Average days'sales uncollected
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A ratio that shows on average how long it takes to collect accounts receivable; 365 days divided by receivable turnover.
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Cash
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coins and currency on hand, checks and money orders from customers, and deposits in bank checking and savings accounts.
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Cash equivalents
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Short-term investments that will revert to cash in 90 days or less from the time they are purchased.
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Compensating balance
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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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Contingent liability
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A potential liability that can develop into a real liability if a particular subsequent event occurs.
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Direct charge-off method
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A method of accounting for uncollectible accounts by directly debiting an expense account when bad debts are discovered instead of using the allowance method; this method violates the matching rule but is required for federal income tax computations.
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Discounting
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A method of selling notes receivable in which the bank deducts the interest from the maturity value of the note to determine the proceeds.
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Dishonored note
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A promissory note that the maker cannot or will not pay at the maturity date.
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Duration of note
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the length of time in days between a promissory note's issue date and its maturity date.
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Electronic funds transfer (EFT)
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The transfer of funds from one bank to another through electronic communication.
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Factor
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An entity that buys accounts receivable.
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Factoring
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The selling or transferring of accounts receivable.
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Held-to-maturity securities
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Debt securities that management intends to hold to their maturity or payment date and whose cash value is not needed until that date.
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Installment accounts receivable
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Accounts receivable that are payable in a series of time payments.
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Interest
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The cost of borrowing money or the return for lending money, depending on whether one is the borrower or the lender.
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Marketable securities
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Short-term investments intended to be held only until needed to pay current obligations. Also called short-term investments.
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Maturity date
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the date on which a promissory note must be paid.
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Maturity value
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The total proceeds of a promissory note--principal plus interest--at the maturity date.
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Notes payable
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Collective term for promissory notes owed by the entity (maker) who promises payment to other entities.
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Notes payable
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Collective term for promissory notes owed by the entity (maker) who promises payment to other entities.
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Notes receivable
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collective term for promissory notes held by the entity to whom payment is promised (payee).
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Percentage of net sales method
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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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Promissory note
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An unconditional promise to pay a definite sum of money on demand or at a future date.
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Quick ratio
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A ratio for measuring the adequacy of short-term financial assets; short-term financial assets divided by current liabilities.
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Receivable turnover
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A ratio for measuring the average number of times receiveables were turned into cash during an accounting period; net sales divided by average net accounts receivable.
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Securitization
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The grouping of receivables into batches for sale at a discount to companies and investors.
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Short-term financial assets
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Temporary investments of excess cash that are intended to be held only until they are needed to pay current obligations. also called marketable securities.
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Trade credit
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Credit granted to customers by wholesalers or retailers.
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Trading securities
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Debt and equity securities bought and held principally for the purpose of being sold in the near term.
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Uncollectible accounts
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Accounts receivable owed by customers who cannot or will not pay. Also called bad debts.
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