COMM 211 Lecture Notes - Lecture 4: Matching Principle, Financial Statement, Accounts Receivable
2 Dec 2017
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Document Summary
Financial assets that are publicly traded (shares or bonds of other public companies) or can be easily converted to cash. The company intends to hold the asset for a short period of time and make a profit. Current asset in the statement of financial position i. e. very liquid. Record at cost of date of purchase and fair market value (fmv) on financial statement reporting date. Interest revenue, dividend revenue, gain and loss recorded in income statement: unrealized gain (loss) unrealized means the investment has not been sold, gain (loss) realized means the investment has been sold. A receivable is recorded when a company sells a good or provides a service on credit (an accrual) Rarely are all receivables collected: some customers will not pay this is called bad debt. We report receivables at the net amount we expect to collect i. e. receivables less bad debt.
