Matching Quiz

Match the following terms and definitions


1				Assumes that the most recently purchased units (the last in) are sold first.


2				A promise that requires another party to pay the business according to a written agreement.


3				Amounts owed to a business by its customers.


4				An accounting method that reduces accounts receivable (as well as net income) for an estimate of uncollectable accounts (bad debts).


5				Reports the estimated amount of this period’s credit sales that customers will fail to pay.


6				The act of removing an uncollectable account and its corresponding allowance from the accounting records.


7				(also called the income statement approach): Estimates bad debts based on the historical percentage of sales that lead to bad debt losses.


8				(also called the balance sheet approach): Estimates uncollectable accounts based on the age of each account receivable.


9				The process of selling and collecting on account. The receivables turnover ratio determines the average number of times this process occurs during the period.


10				A measure of the average number of days from the time a sale is made on account to the time it is collected.


11				An arrangement where receivables are sold to another company (called a factor) for immediate cash (minus a factoring fee).


12				A non-GAAP alternative to the allowance method of accounting for uncollectable accounts.

Answer choices for questions 1 through 12

A)	Days to collect
B)	Last-in, first-out
C)	Bad Debt Expense
D)	Note receivable
E)	Accounts receivable
F)	Aging of accounts receivable method
G)	Write-off
H)	Allowance method
I)	Factoring
J)	Percentage of credit sales method
K)	Direct write-off method
L)	Receivables turnover