ADMS 2500 Chapter Notes -Remittance, Income Statement, Current Liability

• School: York University
• Department: Administrative Studies
• Course: ADMS 2500
• Professor: Brian Gaber

Document Summary

Inter-firm sales usually made by credit transaction, called sales on account. Receivables and payables that arise in the company"s transactions from customers and suppliers. Advances to or from company should not be recorded under these accounts. Should separate trade accounts from receivables and payable. Many businesses make sales on installment basis. Customer signs contract to make down payment and plus installments. If installment contract informs to company"s normal trade practices then installment receivables is a current asset. Sometimes companies liberalize credit policy to increase sales but this further could increase credit losses. Most companies have departments to deal with credit policies. Credit personnel may set credit limits, deal with unpaid credit and conduct investigations. Credit losses are dr to uncollectible accounts expense/bad debts expense. Direct write off uncollectable accounts charged to expense account for that particular period. Write off method is disapproved by accountants. Firm where credit losses are rare write off method is okay and better.