COMM 111 Chapter Notes - Chapter 5: Debits And Credits, Book Value, Annual Percentage Rate
Document Summary
Investments a company plans to hold for one year or less. Invest excess cash for a short period of time and earn a return until the cash is needed. Realized gain: sale price greater than investment carrying amount. Realized loss: sale price less than investment amount. Investments earn interest revenue and dividend revenue: also create gains and losses, short term investments are reported in section below operating revenues and expenses. Receivables are monetary claims against others: selling goods and services on account (accounts receivable, lending money (notes receivable) Bad debt expense is an expense associated with failure to collect receivables. Records collection losses on the basis of estimates: bases it on past collection experience. Sets up allowance for uncollectible accounts: or allowance for bad debts, **contra account to accounts receivable two ways to estimate uncollectibles, percentage of sales method, aging of receivables method.
