Principles of Financial Accounting Exam 3 Questions With Solutions 100% Correct

Principles of Financial Accounting Exam 3
Questions With Solutions 100% Correct

allowance method of accounting for uncollectible accounts estimated rather than the

actual amount of uncollectible accounts expense




collateral assets pledged as security for a loan




contra asset account used to reduce the reported value of the asset to which it relates




direct write off method recognizing uncollectible accounts expense when accounts are

determined to be uncollectible




Interest fee paid for the use of funds




Liquidity ability to convert assets to cash quickly and meet short-term obligations




Maker the party issuing a note

, Principles of Financial Accounting Exam 3
Questions With Solutions 100% Correct
matching concept recognizing expenses in the same accounting period as the revenues

they produce




maturity date the date that a liability is due to be settled




net realizable value the amount of accounts receivable a company expects to actually

collect in cash




Notes receivable notes that evidence rights to receive cash in the future




operating cycle process of converting cash into inventory, inventory into receivables, and

receivables back into cash




payee the party collecting cash




percent of receivables method a method of estimating the amount of uncollectible

accounts by taking a percent of the outstanding receivables balance