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Match Each of the Following Terms with the Appropriate Definitions

Question 170

Matching

Match each of the following terms with the appropriate definitions.

Premises:

Responses:

Factor

A method of accounting for bad debts that matches the estimated loss from uncollectible accounts receivable against the sales they helped to produce

Materiality principle

A method of accounting for bad debts that records the loss from an uncollectible account receivable when it is determined to be uncollectible

Dishonoring a note

A buyer of accounts receivable who charges the seller a fee and then receives cash from the receivables as they come due

Full disclosure principle

Amounts owed by customers from credit sales for which payment is required in periodic payments over an extended period of time

Allowance method

The amount that the signer of a note agrees to pay back when the note matures, not including interest

Principal of a note

Refers to a note maker inability or refusal to pay the note at maturity

Accounts receivable turnover

A measure of both the quality and liquidity of accounts receivable. It indicates how often, on average, receivables are received and collected during the period

Installment accounts receivable

One who signs a note and promises to pay it at maturity

Maker of a note

The accounting principle that states that an amount can be ignored if its effect on the financial statements is not important to their users

Direct write-off

The accounting principle that requires the financial statements (including the notes) to report all relevant information about operations and financial condition

Premises:

Factor

Materiality principle

Dishonoring a note

Full disclosure principle

Allowance method

Principal of a note

Accounts receivable turnover

Installment accounts receivable

Maker of a note

Direct write-off

Responses:

A method of accounting for bad debts that matches the estimated loss from uncollectible accounts receivable against the sales they helped to produce

A method of accounting for bad debts that records the loss from an uncollectible account receivable when it is determined to be uncollectible

A buyer of accounts receivable who charges the seller a fee and then receives cash from the receivables as they come due

Amounts owed by customers from credit sales for which payment is required in periodic payments over an extended period of time

The amount that the signer of a note agrees to pay back when the note matures, not including interest

Refers to a note maker inability or refusal to pay the note at maturity

A measure of both the quality and liquidity of accounts receivable. It indicates how often, on average, receivables are received and collected during the period

One who signs a note and promises to pay it at maturity

The accounting principle that states that an amount can be ignored if its effect on the financial statements is not important to their users

The accounting principle that requires the financial statements (including the notes) to report all relevant information about operations and financial condition

Correct Answer:

Premises:

Responses:

Factor

Materiality principle

Dishonoring a note

Full disclosure principle

Allowance method

Principal of a note

Accounts receivable turnover

Installment accounts receivable

Maker of a note

Direct write-off