ACG-2021 Lecture Notes - Lecture 8: Accounts Receivable, Income Statement, Current Asset
Document Summary
Types of receivables: amounts due from individuals and companies that are expected to be collected in cash. Amounts customers owe an account that results from the sale of goods and services. Almost always qualify as trade receivables; almost never charge interest. Written promise (formal instrument) for amount to be received. Sometimes qualify as trade receivables; almost always charge interest. Nontrade receivables including interest, loans to officers, advances to employees, interest (non-trade interest), and income taxes refundable. Service organization- records a receivable when it performs service on account. Merchandiser- records accounts receivable at the point of sale of merchandise on account: valuing accounts receivable. Valuation (net realizable value: uncollectible accounts receivable. Sales on account raise the possibility of accounts no being collected. Seller records losses that result from extending credit as bad debts. Expense which is classified as an operating expense on the income statement. Valuing accounts receivable: methods of accounting for uncollectible accounts.
