The following words and phrases were discussed in this chapter. 

1. Notes receivable. 

2. Cash (net) realizable value. 

3. Accounts receivable turnover. 

4. Aging the accounts receivable. 

5. Percentage-of-receivables basis. 

6. Dishonored (defaulted) note. 

7. Concentration of credit risk. 

8. Allowance method. 

9. Direct write-off method. 

10. Factor. 

Instructions 

Match each word or phrase with its description below. 

a. ________ Written promise (as evidenced by a formal instrument) for amounts to be received. 

b. ________ A method of accounting for bad debts that involves estimating uncollectible accounts at the end of each period. 

c. ________ A measure of the liquidity of accounts receivable, computed by dividing net credit sales by average net accounts receivable. 

d. ________ A method of accounting for bad debts that involves charging receivable balances to Bad Debt Expense at the time receivables from a particular company are determined to be uncollectible. 

e. ________ A finance company or bank that buys receivables from businesses for a fee and then collects the payments directly from the customers. 

f. ________ The net amount a company expects to receive in cash from receivables. 

g. ________ The threat of nonpayment from a single large customer or class of customers that could adversely affect the financial health of the company. 

h. ________ A note that is not paid in full at maturity. 

i. ________ A method of estimating the amount of bad debt expense whereby management establishes a percentage relationship between the amount of receivables and the expected losses from uncollectible accounts. 

j. ________ A schedule of customer balances classified by the length of time they have been unpaid.