Net Accounts Receivable: Aging of Receivables Method definitions Flashcards
Net Accounts Receivable: Aging of Receivables Method definitions
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Aging of Receivables Method Balance sheet approach estimating uncollectible accounts by categorizing receivables based on age and applying specific uncollectibility percentages. Allowance for Doubtful Accounts Contra-asset account reflecting the estimated amount of accounts receivable expected to be uncollectible. Bad Debt Expense Amount recognized in the period to adjust the allowance for doubtful accounts to the required ending balance. Aging Schedule Table categorizing accounts receivable by age groups and assigning uncollectibility percentages to each group. Uncollectibility Percentage Estimated likelihood that receivables in a specific age category will not be collected. Gross Accounts Receivable Total outstanding amounts owed to a company by customers before deducting any allowance for doubtful accounts. Balance Sheet Approach Method focusing on estimating uncollectible accounts based on the accounts receivable balance rather than sales. Ending Balance Final amount in the allowance for doubtful accounts after considering beginning balance, bad debt expense, and write-offs. Beginning Balance Amount in the allowance for doubtful accounts at the start of the period, used in calculating adjustments. Write-offs Amounts removed from accounts receivable and the allowance for doubtful accounts when deemed uncollectible. Journal Entry Accounting record debiting bad debt expense and crediting allowance for doubtful accounts to reflect estimated uncollectibles. Contra-asset Account Account that reduces the balance of a related asset, such as the allowance for doubtful accounts reducing accounts receivable. Net Accounts Receivable Amount expected to be collected from customers, calculated as gross accounts receivable minus the allowance for doubtful accounts. Credit Balance Normal balance for the allowance for doubtful accounts, indicating the amount set aside for potential uncollectibles. Age Category Grouping of receivables based on how long amounts have been outstanding, used to assess collection risk.
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