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Chapter 8 Vocab - Chapter 8 Vocab 1 Accounts Receivable...

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Chapter 8 Vocab 1) Accounts Receivable: Amounts owed by customers on account. 2) A/R Turnover Ratio: A measure of the liquidity of A/R; computed by dividing net credit sales by average net A/R. 3) Aging the A/R: The analysis of customer balances by length of time they have been unpaid. 4) 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. 5) Allowance Method: A method of accounting for bad debts that involves estimating uncollectible accounts at the end of each period. 6) Average Collection Period: The average amount of time that a receivable is outstanding; calculated by dividing 365/A/R Turnover Ratio. 7) Bad Debts Expense: An expense account to record uncollectible receivables. 8) Cash (net) Realizable Value: The net amount a company expects to receive in cash. 9) Direct Write off Method: A method of accounting for bad debts that involves expensing accounts at the time they are determined to be uncollectible.
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