Accounting 1 Chapter 24

An Accounts Receivable account that cannot be collected

• Uncollectible account

• Writing off an account

Canceling the balance of a customer account because the customer does not pay

• Writing off an account

• Allowance for Uncollectible Accounts

• Uncollectible account

Contra asset account for Accounts Receivable

• Uncollectible Accounts Expense

• Allowance for Uncollectible Accounts

Method of accounting for bad debts used by a business to remove from the accounting records an individual account determined to be uncollectible

• Allowance method

• Direct write-off method

Expense account used to record the expense incurred when an Accounts Receivable customer does not pay

• Uncollectible Accounts Expense

• Book value of accounts receivable

Method used by a business to record the estimated uncollectible accounts expense in the same fiscal year as the related sales are recorded

• Book value of accounts receivable

• Allowance method

A method of estimating uncollectible accounts expense in which a business assumes that a certain percentage of each year’s net sales will be uncollectible

• Percentage of net sales

• Aging of accounts receivable

A method of estimating the uncollectible accounts expense in which each customer’s account is classified by age, the age classifications are multiplied by certain percentages, and the total estimated uncollectible accounts are added to determine the end-of-period balance in Allowance for Uncollectible Accounts

• Aging of accounts receivable

• Matching Principle

Fundamental principle of accounting requiring that revenue should be matched with the expenses incurred in generating the revenue. I.E. December revenue is matched to December Expenses.

• Marketing Principle

• Matching Principle

Difference between Accounts Receivable and Allowance for Uncollectible Accounts

• Book value of accounts receivable

• Book value of accounts payable