BUS 202 Lecture Notes - Lecture 8: Financial Statement, Accrual, Income Statement
13 Mar 2017
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Document Summary
Cash equivalent - a highly liquid investment having a maturity of three months or less, should be at minimal risk of a change in value. Short term investment - a liquid investment having a maturity of 3 months to one year. Long term investment - an investment having a maturity of more than one year. Initial recognition - when an entity measures the initial value of a financial asset or financial liability, measured at its fair value (plus or minus) Subsequent recognition - costs which are incurred after the asset is recognized in the financial statement (equipment maintenance) Two conditions for reporting revenue: good has been delivered, reasonable assurance of future payment. Bad debt when a customer, who has purchased on account, does not pay their debt. Bad debt expense an estimate of uncollectable accounts out of current year"s revenue. Allowance for bad debt an estimate of uncollectable accounts out of total receivables.
