ACCTG 201 Vocabulary Midterm 2

Sales allowance

A customer receives a partial refund of the sales price after the customer discovers a flaw in the merchandise. The customer keeps the merchandise

Sales return

A customer returns merchandise purchased during the month and receives a refund of the full sales prices

Net realizable value of accounts receivable is the

Amount of cash the firm expects to collect

Raven receives a 3 year note receivable from a customer for goods sold. How should Raven report this note receivable in its financial statements?

As a non current asset

Sales to customers in which the customers pay within 30 to 60 days are referred to as

Credit sales Sales on account

Which of the following are classified as receivables?

Loans by a company to other entities Interest due from loans to customers

Two entries are required when a previously written off account is paid

Record the collection on the account receivable Reinstate the account receivable

Trade receivable is another term for _____ receivable

accounts

Accounts receivable are normally classified as

current assets

A sales allowance _____ the amount owed by the customer for merchandise that is _____ by the customer

increased; retained

When a company has earned interest in the current period but has not yet recorded the interest, what type of adjustment is the company required to make?

make adjusting entry at the end of the current period to accrue the interest earned

The allowance method estimates

uncollectible accounts

A calendar year end company that accepts a 3 month interest bearing note on Dec 1 must accrue _____ on Dec 31

interest