estimated value of accounts recievable that will not be collected
reinstate
reversing write off
contra asset account
account subtracted from another asset account
uncollectible accounts expense
expense assosciated with uncollectible accounts recievable
percent of revenue method
estimating the amount of uncollectible accounts expense as a percentage of the revenue earned during the accounting period
percentage of receivables method
estimating the amount of the allowance for doubtful accounts as a percentage of the outstanding receivables balance; longer an account receivable is outstanding, the less likely it is to be paid
aging of accounts receivable
classigying each account recievable by the number of days it has been outstanding
promissory note
a legal document respresenting a credit agreement between a lender and a borrower
maker
borrower; must pay note on due date
payee
person to whom the note is made payable; lender
principal
amount of money loaned
interest
economic benefit earned for loaning the principal
maturity date
date on which the maker must repay and make final interest payment
collateral
assets belonging to the maker that are assigned as security to ensure everything is paid
accrued interest
interest that has been recognized before cash is exchanged
adjusting entry
updates the account balances prior to preparing financial statements
matching concept
revenue is recognized in the period in which it is earned regardless of when the related cash is collected
liquidity
how quickly assets are expected to be converted to cash during normal operations
special identification inventory method
each particular piece of inventory has the cost of good sold that that particular inventory costed (VIN #s for cars)
FIFO
first in, first out; the costof the iems purchased first are asigned to cost of goods sold
LIFO
last in, first out; cost of the items purchased last be charged to cost of good sold
weighted average inventory method
assigns the average cost of the items available to cost of goods sold
physical flow of goods
actual physical movement of goods through the business, usually FIFO
lower of cost or market (LCM)
if the market price is lower than its purchase price, use which ever is lower