"CLEP Financial Accounting," Vocabulary from Chapter 11

This list focuses on other receivables.

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25 words 17 learners

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Full list of words from this list:

words only definitions & notes
  1. discount
    an amount or percentage deducted
  2. proceeds
    the income or profit arising from a transaction
  3. future
    effective in or looking toward time yet to come
  4. value
    the amount considered to be equivalent for something else
  5. borrow
    get temporarily
  6. maturity
    the date on which an obligation must be repaid
  7. mature
    become due for repayment
  8. principal
    the original amount of debt on which interest is calculated
  9. loan
    the temporary provision of money (usually at interest)
  10. account
    furnish a justifying analysis or explanation
  11. analyze
    make a mathematical, chemical, or grammatical study of
  12. promissory
    relating to a verbal commitment by one person to another
  13. receive
    get something; come into possession of
  14. default
    fail to pay up
  15. accrue
    grow by addition
  16. partial
    being or affecting only a segment
  17. deliver
    relinquish possession or control over
  18. difference
    the number that remains after subtraction
  19. guarantee
    give surety or assume responsibility
  20. recover
    regain or make up for
  21. average
    an intermediate scale value regarded as normal or usual
  22. ratio
    the relative magnitudes of two quantities
    The acid test ratio formula is the same as the quick ratio formula: quick assets (assets quickly changeable into cash) divided by current liabilities. A good number is 20%. Too low indicates a future difficulty in paying current bills.
  23. formula
    a statement expressing some fundamental principle
    --A/R - allowance = net receivables
    --beginning net A/R + ending net A/R divided by 2 = average net A/R
    --average net A/R divided by one day's sales = days' sales in A/R
    --net sales on account divided by 365 days = one day's sales
    --future value of the note x discount % x years (or fraction thereof) = discount
    --loan amount (principal) x rate% x years (or fraction thereof) = interest
    --future value - discount = proceeds
  24. principle
    a rule or standard especially of good behavior
    The Present Value Principle requires notes to be shown at their present value. When given a future value, GAAP requires that the interest be backed out. When given a non-interest-bearing note (which has interest in the face amount), GAAP requires that the interest be backed out.
  25. clue
    evidence that helps to solve a problem
    --Don't worry about calculating the interest. The CLEP exam will give you the present value.
    --Don't count days on the CLEP exam unless the question asks you to do so. Months will do.
    --Take no shortcuts! They are traps.
Created on November 2, 2016 (updated December 14, 2016)

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