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Allowance method |
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Definition of Allowance methodAllowance methodA method of adjusting accounts receivable to the amount that is expected to be collected based on company experience.
Related Terms:bad debtsRefers to accounts receivable from credit sales to customers Capitalization methodA method of constructing a replicating portfolio in which the manager purchases a Current rate methodUnder this currency translation method, all foreign currency balance-sheet and income Direct estimate methodA method of cash budgeting based on detailed estimates of cash receipts and cash Flow-through methodThe practice of reporting to shareholders using straight-line depreciation and Log-linear least-squares methodA statistical technique for fitting a curve to a set of data points. One of the Monetary / non-monetary methodUnder this translation method, monetary items (e.g. cash, accounts Normalizing methodThe practice of making a charge in the income account equivalent to the tax savings Purchase methodAccounting for an acquisition using market value for the consolidation of the two entities' Residual methodA method of allocating the purchase price for the acquisition of another firm among the Simple compound growth methodA method of calculating the growth rate by relating the terminal value to Statement-of-cash-flows methodA method of cash budgeting that is organized along the lines of the statement of cash flows. Temporal methodUnder this currency translation method, the choice of exchange rate depends on the Allowance for doubtful accountsA contra account related to accounts receivable that represents the amounts that the company expects will not be collected. Direct methodA method of preparing the operating section of the Statement of Cash Flows that uses the company’s actual cash inflows and cash outflows. Direct write-off methodA method of adjusting accounts receivable to the amount that is expected to be collected by eliminating the account balances of specific nonpaying customers. Indirect methodA method of preparing the operating section of the Statement of Cash Flows that does not use the company’s actual cash inflows and cash outflows, but instead arrives at the net cash flow by taking net income and adjusting it for noncash expenses and the changes from last year in the current assets and current liabilities. algebraic methoda process of service department cost allocation direct methoda service department cost allocation approach dividend growth methoda method of computing the cost FIFO method (of process costing)the method of cost assignment that computes an average cost per equivalent high-low methoda technique used to determine the fixed judgmental method (of risk adjustment)an informal method of adjusting for risk that allows the decision maker method of least squaressee least squares regression analysis method of neglecta method of treating spoiled units in the modified FIFO method (of process costing)the method of cost assignment that uses FIFO to compute a cost per net present value methoda process that uses the discounted risk-adjusted discount rate methoda formal method of adjusting for risk in which the decision maker increases the rate used for discounting the future cash flows to compensate for increased risk simplex methodan iterative (sequential) algorithm used to solve multivariable, multiconstraint linear programming problems six-sigma methoda high-performance, data-driven approach to analyzing and solving the root causes of business problems step methoda process of service department cost allocation strict FIFO method (of process costing)the method of cost assignment that uses FIFO to compute a cost per equivalent unit and, in transferring units from a department, keeps the weighted average method (of process costing)the method of cost assignment that computes an average cost per Bootstrapping, bootstrap methodAn arithmetic method for backing an Allowance for bad debtsAn offset to the accounts receivable balance, against which First in, first-out costing method (FIFO)A process costing methodology that assigns the earliest Moving average inventory methodAn inventory costing methodology that calls for the re-calculation of the average cost of all parts in stock after every purchase. Payback methodA capital budgeting analysis method that calculates the amount of Purchase methodAn accounting method used to combine the financial statements of Sales allowanceA reduction in a price that is allowed by the seller, due to a problem Capital Consumption AllowanceSee depreciation. Depreciation AllowancesTax deductions that businesses can claim when they spend money on investment goods. Benefit Ratio MethodThe proportion of unemployment benefits paid to a company’s Benefit Wage Ratio MethodThe proportion of total taxable wages for laid off Allowance for Doubtful AccountsAn estimate of the uncollectible portion of accounts receivable Average-Cost Inventory MethodThe inventory cost-flow assumption that assigns the average Completed-Contract MethodA contract accounting method that recognizes contract revenue Direct-Method FormatA format for the operating section of the cash-flow statement that reports actual cash receipts and cash disbursements from operating activities. Equity MethodAccounting method for an equity security in cases where the investor has sufficient First-In, First-Out (FIFO) Inventory MethodThe inventory cost-flow assumption that Full-Cost MethodA method of accounting for petroleum exploration and development expenditures Indirect-Method FormatA format for the operating section of the cash-flow statement that Last-In, First-Out (LIFO) Inventory MethodThe inventory cost-flow assumption that assigns the most recent inventory acquisition costs to cost of goods sold. The earliest inventory Percentage-of-Completion MethodA contract accounting method that recognizes contract Successful Efforts MethodA method of accounting for petroleum exploration and development Valuation AllowanceA contra- or reduction account to deferred tax assets. Capital Cost Allowance (CCA)The annual depreciation expense allowed by the Canadian Income Tax Act. Net Present Value (NPV) MethodA method of ranking investment proposals. NPV is equal to the present value of the future returns, discounted at the marginal cost of capital, minus the present value of the cost of the investment.
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