Match each of the following terms with the appropriate definitions.

Question

A. A method of accounting for bad debts that records the loss from an uncollectible account receivable immediately upon determining it is uncollectible.
B. A method of accounting for bad debts that matches the estimated loss from uncollectible accounts receivable against the sales they helped to produce.
C. The accounting principle that requires financial statements (including the notes) to report all relevant information about operations and financial condition.
D. Selling all or a portion of accounts receivable to a finance company or bank.
E. Refers to a note maker's inability or refusal to pay a note at maturity.
F. The accounting constraint that states that an amount can be ignored if its effect on the financial statements is unimportant to its users.
G. Committing accounts receivable as security for a loan.
H. The amount that the signer of a note agrees to pay back when the note matures, not including interest.
I. A measure of both the quality and liquidity of accounts receivable that indicates how often, on average, receivables are received and collected during the period.
J. Amounts owed by customers from credit sales for which payment is required in periodic payments over an extended period of time.

Answer 1

A. Direct write-off method
B. Allowance method
C. Full disclosure principle
D. Factoring accounts receivable
E. Dishonoring a note
F. Materiality constraint
G. Pledging accounts receivable
H. Principal of a note
I. Accounts receivable turnover
J. Installment accounts receivable