BUS103: Introduction to Financial Accounting

7a. Define and apply the accounting elements associated with receivables and payables

Notes receivable and notes payable require calculations of interest charges to record interest revenue and interest expense.

Before you attempt the final exam, practice calculating interest charges with a principal amount, an annual interest rate, and different lengths of time (30 days, 90 days, 180 days, etc.)

For help calculating interest charges, read Notes Receivable and Notes Payable on pages 35-42.

 

Unit 7 Vocabulary

Be sure you understand these terms as you study for the final exam. Try to think of the reason why each term is included.

• Allowance for Doubtful Accounts
• Bad debts expense
• Cash proceeds
• Contingent liabilities
• Current liabilities
• Discount on Notes Payable
• Interest
• Long-term liabilities
• Net realizable value
• Operating cycle
• Payable
• Percentage-of-receivables method
• Percentage-of-sales method
• Principal
• Promissory note
• Uncollectible accounts expense