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31 Cards in this Set
- Front
- Back
Accounts receivable is? |
A control account |
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What is a supplementary record for accounts receivable? |
Accounts receivable Ledger or accounts receivable subsidiary ledger |
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What does the schedule of accounts receivable show? |
That the balance of accounts receivable in the general ledger equals the total of its customers balances in the accounts receivable Ledger |
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Credit card entry when cash is received immediately on deposit : |
Debit cash , debit credit card expense, and credit sales |
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Credit card entry when cash is received some time after deposit : |
Debit accounts receivable credit card company , debit credit card expense, and credit sales |
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Entry to record cash later received by the credit card company on sale : |
Debit cash and credit accounts receivable credit card company |
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What is installment account receivable? |
An account that record amounts owed by customers from credit sales for which payment is required in periodic amounts over an extended time period. |
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What are uncollectible accounts / bad debts? |
When customers will not pay what they owe the company |
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What is the direct write off method? |
A method for accounting for bad debts by writing them off directly but is not gaap because it goes against the matching principle so we do not use it!! |
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What is the allowance method? |
A system for accounting for bad debts using an account called the allowance for doubtful accounts |
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What type of account is the allowance for doubtful accounts? |
It is a contra asset account and it takes away from Total accounts receivable |
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What is the normal balance of allowance for doubtful accounts? |
Credit |
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What is the entry to record the establishment of allowance for doubtful accounts? |
Debit bad debt expense and credit allowance for doubtful accounts |
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What is the realizable value? |
The expected proceeds from converting an asset Into Cash |
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What is the entry to record the right off of bad debt using the allowance method? |
Debit allowance for doubtful accounts and credit accounts receivable |
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If the customer pays after the account is written off what do you do? |
Reinstate the account previously written off then record full payment of the account |
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What are two methods to estimate bad debts? |
1. Percent of sales method / income statement method 2. Accounts receivable method / balance sheet method |
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For the percent of sales method what account do we pay attention to? |
Bad debts expense |
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For the accounts receivable method what account to be pay attention to? |
The allowance for doubtful accounts account |
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For accounts receivable method do we pay attention to the opening balance of the allowance for doubtful accounts? |
Yes and pay attention to if it has a credit balance or debit balance |
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What does the Aging of accounts receivable method use? |
Both past and current receivables information to estimate the allowance amount |
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What is a promissory note? |
A written promise to pay a specified amount of money usually with interest, either on demand or at a definite future date |
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Who is the maker of the Note versus the pay of the note? |
The maker of the note is the person who needs the money but the pay of the note is the person who is lending the money |
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What is the maturity date of a note? |
The day the note (principal and interest) must be repaid |
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What is the formula to calculate the interest of a note? |
Principal of note X annual interest rate X (days past ÷ by 360) |
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The entry to record the payment of note receivable |
Debit cash, credit note receivable, and credit interest Revenue |
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What are two ways to convert receivables? |
1. Selling them 2. Using them as security for a loan |
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Entry to record the selling of receivable taking into account the factoring fee expense |
Debit cash , debit Factory expense , and credit accounts receivable |
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Entry to record the pledging of a receivable |
Debit cash and credit notes payable |
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What is the accounts receivable turnover? |
Net sales ÷ average accounts receivable, net |
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How do you find the average accounts receivable? |
(Beginning balance + ending balance) ÷ 2 |