ACCTMIS 2200 Lecture 5: 5. Accounts Receivable Lecture

• School: Ohio State University
• Department: Accounting and Management Info
• Course: ACCTMIS 2200
• Professor: Marc Smith

Document Summary

Record revenue when earnings process is (virtually) complete and reasonable certainty to collectability. Earnings process = complete when goods are sold or services performed regardless of cash g/s before cash = accrued revenue = account receivable iii. Sales revenue represents revenue earned from selling inventory b. i. Sales returns & allowances a. b. a. b. c. Sales returns result when customers return unsatisfactory merchandise for a refund/credit. Sales allowances result in a reduction of price for unsatisfactory merchandise. Sales discounts offer a cash discount for the prompt payment of a balance due. 3/10, n/30 = 3% discount on all payments in 10 days; remaining balance due in 30 days. Characteristics of sales returns & allowances and sales discounts a. b. c. Result in decrease to revenues on income statement. Accounts receivable represent cash owed to the company. Accounts receivable come about when the company makes a credit sale. Big issue when you sell goods on account