Chapter8terms

Chapter8terms - Accounts receivable Amounts owed by...

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Accounts receivable Amounts owed by customers on account. Accounts receivable turnover ratio A measure of the liquidity of accounts receivable; computed by dividing net credit sales by average net accounts receivable. Aging the accounts receivable The analysis of customer balances by the length of time they have been unpaid. Allowance for Doubtful Accounts An account that shows the estimated amount of claims on customers that the company expects will become uncollectible in the future. Allowance method A method of accounting for bad debts that involves estimating uncollectible accounts at the end of each period. Average collection period The average amount of time that a receivable is outstanding; calculated by dividing 365 days by the accounts receivables turnover ratio. Bad Debts Expense An expense account to record uncollectible receivables. Cash (net) realizable value The net amount a company expects to receive in cash.
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