Net Accounts Receivable: Direct Write-off Method definitions Flashcards
Net Accounts Receivable: Direct Write-off Method definitions
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Bad Debt Expense Loss recognized when amounts owed by customers from credit sales are determined to be uncollectible. Direct Write-off Method Accounting approach where losses from uncollectible accounts are recorded only when specific accounts are deemed uncollectible. Matching Principle Accounting guideline requiring expenses to be recorded in the same period as the revenues they help generate. Accounts Receivable Amounts owed to a business by customers who purchased goods or services on credit. Credit Sale Transaction where goods or services are provided to a customer with payment to be received at a later date. Revenue Income earned from the sale of goods or services before any expenses are deducted. Uncollectible Account Receivable that is determined to be impossible to recover from the customer. GAAP Set of standardized accounting principles and guidelines used to ensure consistency and transparency in financial reporting. Income Statement Financial report showing a company’s revenues and expenses over a specific period, resulting in net income or loss. Journal Entry Formal accounting record documenting a business transaction’s financial impact on accounts. Debit Accounting entry that increases assets or expenses, or decreases liabilities or equity. Credit Accounting entry that increases liabilities or equity, or decreases assets or expenses. Net Accounts Receivable Total receivables expected to be collected, after deducting amounts estimated to be uncollectible. Loss Negative financial impact resulting from uncollected receivables or other unfavorable events. Financial Statement Formal record summarizing the financial activities and position of a business at a specific point in time.
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