Chapter 8. Reporting and Analyzing Receivables

Save this PDF as:
 WORD  PNG  TXT  JPG

Size: px
Start display at page:

Download "Chapter 8. Reporting and Analyzing Receivables"

Transcription

1 Chapter 8 Reporting and Analyzing Receivables Study Objective 1 - Identify the Different Types of Receivables The term receivables refers to amounts due from individuals and companies. Receivables are frequently classified as: 1. Accounts receivable 2. Notes receivable Represent claims for which formal instruments of credit are issued as evidence of debt. Often called trade receivable. Notes receivable give holder a stronger legal claim to assets than accounts receivable. Promissory note is a negotiable instrument and may be transferred to another party by endorsement. 3. Other receivables Nontrade including interest receivable, loans to company officers, advances to employees, and income taxes refundable. Study Objective 2 - Explain how Accounts Receivable are Recognized in the Accounts Merchandisers record accounts receivable at point of sale of merchandise on account. Entry is recorded to increase both Sales and Accounts Receivable. Receivable may be reduced by sales discount and/or sales return.

2 Study Objective 3 Valuing Accounts Receivable Credit losses are debited to Bad Debt Expense (or Uncollectible Accounts Expense). Two methods are used in accounting for uncollectible accounts the Direct Write-off Method and the Allowance Method. Direct write-off method Accounts are written off when determined uncollectible by increasing Bad Debt Expense and decreasing Accounts Receivable as follows: Dec. 12 Bad Debts Expense 200 Accounts Receivable M. E. Doran 200 No attempt is made to match bad debts expense to sales revenues in the income statement or to show accounts receivable in the balance sheet at the amount actually expected to be received. Unless bad debt losses are insignificant, the direct write-off method is acceptable for financial reporting purposes. The allowance method of accounting for bad debts involves estimating uncollectible accounts at the end of each period. Provides better matching on the income statement and ensures that receivables are stated at their. Cash (net) realizable value is the net amount expected to be received in cash; Receivables are therefore reduced by estimated uncollectible receivables on the balance sheet through use of the allowance method.

3 Allowance method required for financial reporting purposes when bad debts are material in amount. 1. Recording estimated uncollectibles 2. Recording the write-off of an uncollectible account 3. Recovery of an uncollectible account 4. Estimating the allowance Study Objective 4 - Compute the Maturity Date of and Interest on Notes Receivable The life of a note may be expressed in months or days. The formula for computing interest is: Face (principle) x Rate (interest) x Time

4 Study Objective 5 - Describe the Entries to Record the Disposition of Notes Receivable At the time a note is received, it is recorded at with no interest added. Notes receivable are reported at their cash (net) realizable value. A note is honored when it is paid in full at maturity. Interest revenue is recorded when the note is paid. However, if interim financial statements are prepared, interest on notes receivable is accrued and shown as interest revenue as it is earned. If a note is not paid in full at maturity, it is called a dishonored note. Study Objective 6 - Explain the Statement Presentation of Receivables Each of the major types of receivables should be identified in the balance sheet or in the notes to the financial statements. Study Objective 7 - Describe the Principles of Sound Accounts Receivable Management Determine to whom to extend credit. Risky customers might be required to provide letters of credit or bank grantees Risky customers might be required to pay cash on delivery (COD). Establish a payment period. Determine a required payment period and communicate that policy to customers. Make sure company's payment period is consistent with that of competitors. Monitor collections. Prepare accounts receivable aging schedule at least monthly. Pursue problem accounts with phone calls, letters, and legal action if necessary.

5 Study Objective 8 - Identify Ratios to Analyze a Company's Receivables Liquidity is measured by how quickly certain asset can be converted into cash. The ratio used to assess the liquidity of the receivables is the receivables turnover ratio. The ratio measures the number of times, on average, receivables are collected during the period. The collection period should not greatly exceed the credit term period. Study Objective 9 - Describe Methods to Accelerate the Receipt of Cash from Receivables There are three reasons for the sale of receivables. The first is their size. In recent years, sellers (retailers, wholesalers, and manufacturers) often have provided financing to purchasers of their goods. Second, receivables may be sold because they may be the only reasonable source of cash. A final reason for selling receivables is that billing and collection are often time-consuming and costly. Credit Card A common type of credit card is a national credit card such as Visa, Master Card, and American Express. Three parties are involved when national credit cards are used in making retail sales: the credit card issuer, who is independent of the retailer, the retailer, and the customer. A retailer's acceptance of a national credit card is another form of selling factoring the receivable. Sales resulting from the use of VISA and MasterCard are considered cash sales by the retailer. These cards are issued by banks.

(a) Accounts Receivable... 23,000 Sales Revenue... 23,000. (b) Sales Returns and Allowances... 2,400 Accounts Receivable... 2,400

(a) Accounts Receivable... 23,000 Sales Revenue... 23,000. (b) Sales Returns and Allowances... 2,400 Accounts Receivable... 2,400 BRIEF EXERCISE 8-1 (a) Other receivables. (b) Notes receivable. (c) Accounts receivable. BRIEF EXERCISE 8-2 (a) Accounts Receivable... 23,000 Sales Revenue... 23,000 (b) Sales Returns and Allowances...

More information

Chapter 8. Receivables

Chapter 8. Receivables Chapter 8 Receivables Receivables mean amounts owed to the company by others. Accounts Receivable are receivables resulting from the company rendering services or selling products to the public. The company

More information

C. Valuing Accounts Receivable.

C. Valuing Accounts Receivable. C. Valuing Accounts Receivable. 1. Valuing receivables involves reporting them at their cash (net) realizable value. Cash (net) realizable value is the net amount expected to be received in cash. 2. Uncollectible

More information

CHAPTER 9 ACCOUNTING FOR RECEIVABLES

CHAPTER 9 ACCOUNTING FOR RECEIVABLES CHAPTER 9 ACCOUNTING FOR RECEIVABLES LEARNING OBJECTIVES 1. IDENTIFY THE DIFFERENT TYPES OF RECEIVABLES. 2. EXPLAIN HOW COMPANIES RECOGNIZE ACCOUNTS RECEIVABLE. 3. DISTINGUISH BETWEEN THE METHODS AND BASES

More information

Accounting for Receivables

Accounting for Receivables Introduction to Accounting 2 Modul 2 Accounting for Receivables After studying this chapter, you should be able to: 1. Identify the different types of receivables. 2. Explain how accounts receivable are

More information

Chapter 8. Reporting and Analyzing Receivables. Study Objectives

Chapter 8. Reporting and Analyzing Receivables. Study Objectives Reporting and Analyzing Receivables Study Objectives Identify the different types of receivables. Explain how accounts receivable are recognized in the accounts. Describe the methods used to account for

More information

Sales and Accounts Receivable. Reporting and Analyzing Receivables. Study Objectives

Sales and Accounts Receivable. Reporting and Analyzing Receivables. Study Objectives Reporting and Analyzing Receivables Study Objectives Identify the different types of receivables. Explain how accounts receivable are recognized in the accounts. Describe the methods used to account for

More information

Chapter 8 Accounting for Receivables 高立翰

Chapter 8 Accounting for Receivables 高立翰 Chapter 8 Accounting for Receivables 高立翰 Study Objectives 1. Identify the different types of receivables. 2. Explain how companies recognize accounts receivable. 3. Distinguish between the methods and

More information

Chapter 07 - Accounts and Notes Receivable. Chapter Outline

Chapter 07 - Accounts and Notes Receivable. Chapter Outline Chapter 07 - Accounts and Receivable I. Accounts Receivable A receivable is an amount due from another party. Accounts Receivable are amounts due from customers for credit sales. A. Recognizing Accounts

More information

CHAPTER 8. Reporting and Analyzing Receivables ANSWERS TO QUESTIONS

CHAPTER 8. Reporting and Analyzing Receivables ANSWERS TO QUESTIONS CHAPTER 8 Reporting and Analyzing Receivables ANSWERS TO QUESTIONS 1. Accounts receivable are amounts customers owe on account. They result from the sale of goods and services (i.e., in trade). Notes receivable

More information

C H A P T E R. Receivables. Financial Accounting 14e. human/istock/360/getty Images. Warren Reeve Duchac

C H A P T E R. Receivables. Financial Accounting 14e. human/istock/360/getty Images. Warren Reeve Duchac human/istock/360/getty Images C H A P T E R 9 Receivables Financial Accounting 14e Warren Reeve Duchac Classification of Receivables The term receivables includes all money claims against other entities,

More information

ANSWERS TO QUESTIONS

ANSWERS TO QUESTIONS ANSWERS TO QUESTIONS 01. The three major types and classification of receivables are as follows: Type Classification (1) Accounts receivable Current asset (2) Notes receivable Current or noncurrent asset

More information

CHAPTER 9. Accounting for Receivables ASSIGNMENT CLASSIFICATION TABLE. Brief. B Problems. A Problems 1, 2 1

CHAPTER 9. Accounting for Receivables ASSIGNMENT CLASSIFICATION TABLE. Brief. B Problems. A Problems 1, 2 1 CHAPTER 9 Accounting for Receivables ASSIGNMENT CLASSIFICATION TABLE Study Objectives Questions Brief Exercises Exercises A Problems B Problems 1. Identify the different types of receivables. 2. Explain

More information

CHAPTER 7 ACCOUNTING FOR RECEIVABLES

CHAPTER 7 ACCOUNTING FOR RECEIVABLES CHAPTER 7 ACCOUNTING FOR RECEIVABLES Key Terms and Concepts to Know Accounts Receivable: Result from sales on account (credit sales), not cash sales. May also result from credit card sales if there is

More information

Financial Accounting. John J. Wild. Sixth Edition. McGraw-Hill/Irwin. Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

Financial Accounting. John J. Wild. Sixth Edition. McGraw-Hill/Irwin. Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved. Financial Accounting John J. Wild Sixth Edition McGraw-Hill/Irwin Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 07 Reporting and Analyzing Receivables Conceptual Learning

More information

CHAPTER 8. Accounting for Receivables 1, 2 1 3, 4, 5, 6, 7 4, 5, 6, 7, 8 12, 13, 14, 15, 16

CHAPTER 8. Accounting for Receivables 1, 2 1 3, 4, 5, 6, 7 4, 5, 6, 7, 8 12, 13, 14, 15, 16 CHAPTER 8 Accounting for Receivables ASSIGNMENT CLASSIFICATION TABLE Learning Objectives Questions Brief Exercises Do It! Exercises A Problems B Problems 1. Identify the different types of receivables.

More information

Chapter 9. Accounting for Receivables. McGraw-Hill/Irwin

Chapter 9. Accounting for Receivables. McGraw-Hill/Irwin Chapter 9 Accounting for Receivables Conceptual Learning Objectives C1: Describe accounts receivable and how they occur and are recorded C2: Describe a note receivable and the computation of its maturity

More information

Jan. 6 Accounts Receivable Chose Inc... 9,200 Sales Revenue... 9,200

Jan. 6 Accounts Receivable Chose Inc... 9,200 Sales Revenue... 9,200 EXERCISE 8-1 Jan. 6 Accounts Receivable Chose Inc... 9,200 Sales Revenue... 9,200 16 Cash ($9,200 $92)... 9,108 Sales Discounts (1% X $9,200)... 92 Accounts Receivable Chose Inc... 9,200 EXERCISE 8-2 Jan.

More information

Cash in bank checking account $22,500 U.S. treasury bills 5,000 Cash on hand 1,350 Undeposited customer checks 1,840 Total $30,690 Requirement 2

Cash in bank checking account $22,500 U.S. treasury bills 5,000 Cash on hand 1,350 Undeposited customer checks 1,840 Total $30,690 Requirement 2 Chapter 7 Solutions EXERCISES Exercise 7 2 Cash and cash equivalents includes: Cash in bank checking account $22,500 U.S. treasury bills 5,000 Cash on hand 1,350 Undeposited customer checks 1,840 Total

More information

CHAPTER 8. Accounting for Receivables 5, 6, 7, 8, 9, 10, 11, 12, 13 5, 6, 7, 8, 9 14, 15, 16, 17 18, 19, 20, 21, 22 10, 11, 12, 13 13, 14, 15

CHAPTER 8. Accounting for Receivables 5, 6, 7, 8, 9, 10, 11, 12, 13 5, 6, 7, 8, 9 14, 15, 16, 17 18, 19, 20, 21, 22 10, 11, 12, 13 13, 14, 15 CHAPTER 8 Accounting for Receivables ASSIGNMENT CLASSIFICATION TABLE Study Objectives Questions Brief Exercises Exercises Problems Set A Problems Set B 1. Record accounts receivable transactions. 1, 2,

More information

Define and explain common types of receivables

Define and explain common types of receivables Chapter 8 Arise from selling goods and services on credit and lending money Right to receive cash in the future from a current transaction Define and explain common types of receivables 3 Amounts to be

More information

Chapter 10. Learning Objectives. Receivables. Receivables. Horngren, Best, Fraser, Willett: Accounting 6e 2010 Pearson Australia

Chapter 10. Learning Objectives. Receivables. Receivables. Horngren, Best, Fraser, Willett: Accounting 6e 2010 Pearson Australia PowerPoint to accompany Chapter 10 Receivables Learning Objectives 1. Design internal controls for receivables 2. Use the allowance method to account for bad debts 3. Use the direct write-off method to

More information

Chapter 9 Receivables

Chapter 9 Receivables Accounting I John Petroff, Nancy Paz, Tibebe Mengistu, and KAREN DE AVILA (2011) Chapter 9 Receivables INTRODUCTION TO RECEIVABLES Receivables are any monetary claims against debtors. Credit can be granted

More information

CHAPTER 8 WHEN REVENUE IS RECOGNIZED RECOGNIZED HOW REVENUE IS REVENUE CYCLE: SALES, RECEIVABLES, AND CASH

CHAPTER 8 WHEN REVENUE IS RECOGNIZED RECOGNIZED HOW REVENUE IS REVENUE CYCLE: SALES, RECEIVABLES, AND CASH CHAPTER 8 REVENUE CYCLE: SALES, RECEIVABLES, AND CASH 1 WHEN REVENUE IS RECOGNIZED Revenue should be recognized when two criteria are met: The promised work has been substantially completed Cash, or a

More information

ACCOUNT DEBIT CREDIT Accounts receivable 10,000 Sales 10,000 To record the sale of merchandise to Sophie Company

ACCOUNT DEBIT CREDIT Accounts receivable 10,000 Sales 10,000 To record the sale of merchandise to Sophie Company CURRENT RECEIVABLES Receivables are the amount owed to the organization by its customers and/or others. Current receivables will be collected within one year or the current operating cycle which ever is

More information

Short-Term Investments & Receivables. Pr. Zoubida SAMLAL

Short-Term Investments & Receivables. Pr. Zoubida SAMLAL Short-Term Investments & Receivables Pr. Zoubida SAMLAL Learning Objective 1 Account for short-term investments Account for short-term investments Accounting for Short-Term Investments Also called marketable

More information

Adjustment for Loss from Uncollectible Accounts (accrued expense)

Adjustment for Loss from Uncollectible Accounts (accrued expense) Adjustment for Loss from Uncollectible Accounts (accrued expense) Objective Explain and illustrate the allowance method of accounting for uncollectible accounts receivable. Cite the advantages and disadvantages

More information

Investments Advance to subsidiary company 81,000

Investments Advance to subsidiary company 81,000 EXERCISE 7-3 (10 15 minutes) Current assets Accounts receivable Customers Accounts (of which accounts in the amount of $40,000 have been pledged as security for a bank loan) $79,000 Installment accounts

More information

Receivables QUIZ AND TEST HINTS

Receivables QUIZ AND TEST HINTS C H A P T E R 9 Receivables QUIZ AND TEST HINTS The following hints may be helpful to you in preparing for a quiz or a test over the material covered in Chapter 9. 1. You should be able to prepare journal

More information

Short-term investments (also known as marketable securities) are easily convertible to cash that a company plans to hold for a year or less.

Short-term investments (also known as marketable securities) are easily convertible to cash that a company plans to hold for a year or less. Accounting Fundamentals Lesson 5 5.0 Receivables & Investments Short-term investments (also known as marketable securities) are easily convertible to cash that a company plans to hold for a year or less.

More information

Unit 6 Receivables. Receivables - Claims resulting from credit sales to customers and others goods or services for money,.

Unit 6 Receivables. Receivables - Claims resulting from credit sales to customers and others goods or services for money,. Unit 6 Receivables 7-1 Receivables - Claims resulting from credit sales to customers and others goods or services for money,. Oral promises of the purchaser to pay for goods and services sold (credit sale;

More information

Accounting Notes. Customer Name 1-30 31-60 61-90 Over 90 Total Names X X X X

Accounting Notes. Customer Name 1-30 31-60 61-90 Over 90 Total Names X X X X Receivables: - amounts to be collected from customers for goods or services provided - a written promise for the future collection of cash Accounting for Uncollectible Accounts: Allowance Method: - recording

More information

Accounting for Short-Term. or Current Assets & Receivables

Accounting for Short-Term. or Current Assets & Receivables Chapter 7 1 Accounting for Short-Term Learning Objectives or Current Assets & Receivables Explain how a credit sale and related account receivable and payment in cash are accounted for. Illustrate your

More information

Chapter 7: Cash & Receivables L7 (pg 399 436)

Chapter 7: Cash & Receivables L7 (pg 399 436) Chapter 7: Cash & Receivables L7 (pg 399 436) UNDERSTANDING CASH AND ACCOUNTS RECEIVABLE How Do Companies Manage and Control Cash? Cash flow budgets help anticipate cash needs and minimize borrowing requirements

More information

Chapter 8: account receivable

Chapter 8: account receivable Chapter 8: account receivable Three accounting issues associated with accounts receivable are: 1. Recognizing accounts receivable 2. Valuing accounts receivable 3. Disposing of accounts receivable Recognizing

More information

1. $45000 2. $108000 3. $63000 4. $135000

1. $45000 2. $108000 3. $63000 4. $135000 For the last several years Monte Cristo Corp. has operated with a gross profit rate of 30%. On January 1 of the current year, the company had on hand inventory with a cost of $150,000. Purchases of merchandise

More information

ACCOUNTING DICTIONARY

ACCOUNTING DICTIONARY ACCOUNTING DICTIONARY A Account a record summarizing all the information pertaining to a single item in the accounting equation Account balance the amount in an account Account number the number assigned

More information

CENTURY 21 ACCOUNTING, 8e General Journal Key Terms and Definitions

CENTURY 21 ACCOUNTING, 8e General Journal Key Terms and Definitions CENTURY 21 ACCOUNTING, 8e General Journal Key Terms and Definitions Chapter 1 Starting A Proprietorship: Changes that Affect the Accounting Equation account: a record summarizing all the information pertaining

More information

Receivables: Definition

Receivables: Definition Receivables: Definition Definition: Receivables are financial instruments according to the definition in IAS 32.11: A financial instrument is any contract that gives rise to a financial asset of one entity

More information

8f1 Accounts Receivable

8f1 Accounts Receivable In July, Lane Co. sells merchandise to Avery Co. on account. In August, Avery pays the balance in full. The entry that Lane will make to record the receipt of cash will include a credit to the account.

More information

Pivotal Issues When Managing. Chapter 7. Cash and Receivables. Skyline College Lecture Notes. Cash Considerations. Cash Requirements.

Pivotal Issues When Managing. Chapter 7. Cash and Receivables. Skyline College Lecture Notes. Cash Considerations. Cash Requirements. Chapter 7 Cash and Receivables Skyline College Lecture Notes Pivotal Issues When Managing Cash and Receivables 1. Cash needs 2. Credit policies 3. Level of accounts receivable 4. Financing receivables

More information

9. Short-Term Liquidity Analysis. Operating Cash Conversion Cycle

9. Short-Term Liquidity Analysis. Operating Cash Conversion Cycle 9. Short-Term Liquidity Analysis. Operating Cash Conversion Cycle 9.1 Current Assets and 9.1.1 Cash A firm should maintain as little cash as possible, because cash is a nonproductive asset. It earns no

More information

Chapter 10: Revenue Recognition and Valuation of Receivables

Chapter 10: Revenue Recognition and Valuation of Receivables Chapter 10: Revenue Recognition and Valuation of Receivables The timing of revenue recognition Valuation of receivables; VAT Accounting for bad debt Refinancing receivables before the due date Receivables

More information

CHAPTER 7 Cash and Receivables

CHAPTER 7 Cash and Receivables CHAPTER 7 Cash and Receivables 7-1 LECTURE OUTLINE Chapter 7, the first of six asset chapters, covers cash, accounts receivable, and notes receivable. Temporary investments (marketable securities) are

More information

Accounting 201 Comprehensive Practice Exam 2C Page 1

Accounting 201 Comprehensive Practice Exam 2C Page 1 Accounting 201 Comprehensive Practice Exam 2C Page 1 1. A business organized as a corporation a. is not a separate legal entity in most states. b. requires that stockholders be personally liable for the

More information

CHAPTER 7. Cash and Receivables. 1. Accounting for cash. 1, 2, 3, 4, 21 1 1, 2 1 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15 8, 9, 10, 11, 12

CHAPTER 7. Cash and Receivables. 1. Accounting for cash. 1, 2, 3, 4, 21 1 1, 2 1 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15 8, 9, 10, 11, 12 CHAPTER 7 Cash and Receivables ASSIGNMENT CLASSIFICATION TABLE (BY TOPIC) Topics Questions Brief Exercises Exercises Problems Concepts for Analysis 1. Accounting for cash. 1, 2, 3, 4, 21 1 1, 2 1 2. Accounting

More information

Current assets. assets that are expected to be converted into cash within one year or within the operating cycle of an entity

Current assets. assets that are expected to be converted into cash within one year or within the operating cycle of an entity CHAPTER 7 Current assets assets that are expected to be converted into cash within one year or within the operating cycle of an entity Chapter 7 Mugan-Akman 2007 2-40 Current Asset Section of a Balance

More information

BUS512M. Module 5. Cash and Accounts Receivable BE6-1, E6-4, E6-5, P6-2

BUS512M. Module 5. Cash and Accounts Receivable BE6-1, E6-4, E6-5, P6-2 BUS512M Module 5 Cash and Accounts Receivable BE6-1, E6-4, E6-5, P6-2 Current Asset Classification A current asset is defined as any asset that is intended to be converted into cash within one year or

More information

Reporting and Analyzing Receivables

Reporting and Analyzing Receivables 2918T_c08_384-431.qxd 8/27/08 10:06 PM Page 384 Reporting and Analyzing Receivables chapter 8 the navigator Scan Study Objectives Read Feature Story Scan Preview Read Text and Answer Do it! p. 394 p. 398

More information

PROFESSOR S NAME ACC 255 FALL 2011 COVER SHEET FOR COMPREHENSIVE PROBLEM 2 (CHAPTERS 2, 5-8)

PROFESSOR S NAME ACC 255 FALL 2011 COVER SHEET FOR COMPREHENSIVE PROBLEM 2 (CHAPTERS 2, 5-8) COMPREHENSIVE PROBLEM 2 (CHAPTERS 2, 5-8) Page 137 NAME ANSWER KEY PROFESSOR S NAME SECTION SCORE ACC 255 FALL 2011 COVER SHEET FOR COMPREHENSIVE PROBLEM 2 (CHAPTERS 2, 5-8) INSTRUCTIONS: COMPLETE ALL

More information

Intermediate Accounting

Intermediate Accounting Intermediate Accounting Thomas H. Beechy Schulich School of Business, York University Joan E. D. Conrod Faculty of Management, Dalhousie University PowerPoint slides by: Bruce W. MacLean, Faculty of Management,

More information

Financial Accounting Chapter 9: Receivables

Financial Accounting Chapter 9: Receivables Supplemental Instruction Handouts Financial Accounting Chapter 9: Receivables 1. At December 31, 2011, AZY Co had $1,550,000 in credit sales for the year. The company believes that 5% of these sales will

More information

BUS312A/612A Financial Reporting I. Homework 10.6.2014 & 10.8.2014 Receivables Chapter 7

BUS312A/612A Financial Reporting I. Homework 10.6.2014 & 10.8.2014 Receivables Chapter 7 BUS312A/612A Financial Reporting I Homework 10.6.2014 & 10.8.2014 Receivables Chapter 7 Chapter 7- You should be able to: Identify elements of cash Identify the types of receivables Explain accounting

More information

Current liabilities - Obligations that are due within one year. Obligations due beyond that period of time are classified as long-term liabilities.

Current liabilities - Obligations that are due within one year. Obligations due beyond that period of time are classified as long-term liabilities. Accounting Fundamentals Lesson 8 8.0 Liabilities Current liabilities - Obligations that are due within one year. Obligations due beyond that period of time are classified as long-term liabilities. Current

More information

CHAPTER5 Accounting for Merchandising Operations 5-1

CHAPTER5 Accounting for Merchandising Operations 5-1 CHAPTER5 Accounting for Merchandising Operations 5-1 5-2 PreviewofCHAPTER5 Merchandising Operations Merchandising Companies Buy and Sell Goods Wholesaler Retailer Consumer The primary source of revenues

More information

BANK OVERDRAFTS IMPAIRMENT EVALUATION PROCESS CASH AND RECEIVABLES U.S. GAAP PERSPECTIVE

BANK OVERDRAFTS IMPAIRMENT EVALUATION PROCESS CASH AND RECEIVABLES U.S. GAAP PERSPECTIVE Chapter 7 Cash and Receivables 7 1 CHAPTER 7 CASH AND RECEIVABLES This IFRS Supplement provides expanded discussions of accounting guidance under International Financial Reporting Standards (IFRS) for

More information

Recording and Adjusting Receivables. KUMC: We support your infinite possibilities!

Recording and Adjusting Receivables. KUMC: We support your infinite possibilities! Recording and Adjusting Receivables KUMC: We support your infinite possibilities! Ditzler Company, a construction supply company, uses the allowance method of accounting for uncollectible accounts receivable.

More information

CENTURY 21 ACCOUNTING, 8e General Journal Chapter Objectives

CENTURY 21 ACCOUNTING, 8e General Journal Chapter Objectives CENTURY 21 ACCOUNTING, 8e General Journal Chapter Objectives Chapter 1 Starting A Proprietorship: Changes that Affect the Accounting Equation After studying Chapter 1, you will be able to: 1. Define accounting

More information

UNDERSTANDING FINANCIAL STATEMENTS

UNDERSTANDING FINANCIAL STATEMENTS UNDERSTANDING FINANCIAL STATEMENTS ITEM 8 It is important that the directors of any business, cooperative or otherwise, understand the financial statements of the business. Without a basic understanding

More information

Assessment Questions

Assessment Questions Assessment Questions AS-1 ( 1 ) Define accounts receivable. The amount billed to customers and owing from them but not yet collected. AS-2 ( 1 ) Describe the presentation of accounts receivable on the

More information

Sample Test Questions CHAPTER 7 CASH AND RECEIVABLES Answer No. Description MULTIPLE CHOICE Conceptual d 1. Identification of cash items. b 2. Identification of cash items. d 3. Classification of travel

More information

CHAPTER 18. Receivables CONTENTS

CHAPTER 18. Receivables CONTENTS CHAPTER 18 Receivables CONTENTS Demonstration problem 18.1 Doubtful debts net credit sales and ageing methods 18.2 Discounting and default of a bill receivable 18.3 Ageing of accounts receivable and adjustment

More information

Completed Journals Test. What are the advantages of using special journals?

Completed Journals Test. What are the advantages of using special journals? Advanced Accounting 1 Career Opportunities Recognize the different Workbook types of jobs. Define the education required for each. September Special Journals Discounts Bank Statement Journalize entries

More information

Financial Statements and Ratios: Notes

Financial Statements and Ratios: Notes Financial Statements and Ratios: Notes 1. Uses of the income statement for evaluation Investors use the income statement to help judge their return on investment and creditors (lenders) use it to help

More information

CHAPTER 7. Investments and Receivables

CHAPTER 7. Investments and Receivables CHAPTER 7 Investments and Receivables OVERVIEW OF EXERCISES, PROBLEMS, AND CASES Estimated Time in Learning Outcomes Exercises Minutes Level 1. Show that you understand the accounting and disclosure 1

More information

Accounting 303 Exam 3, Chapters 7-9

Accounting 303 Exam 3, Chapters 7-9 Accounting 303 Exam 3, Chapters 7-9 Spring 2012 Name Row I. Multiple Choice Questions. (2 points each, 30 points in total) Read each question carefully and indicate your answer by circling the letter preceding

More information

128 SU 3: Financial Accounting I

128 SU 3: Financial Accounting I 128 SU 3: Financial Accounting I 3.5 FINANCIAL ASSETS AND LIABILITIES Definitions 1. Financial assets include cash, equity instruments of other entities (e.g., preference shares), contract rights to receive

More information

ACCT 335 Chapter 7 Pre-Assigned Problems Suggested Solutions

ACCT 335 Chapter 7 Pre-Assigned Problems Suggested Solutions ACCT 335 Chapter 7 Pre-Assigned Problems Suggested Solutions PROBLEM 7-2 (a) Sales $1,980,000 Sales discounts 4,400 Sales returns and allowances 60,000 Net sales 1,915,600 Percentage 1 1/2% Bad debt expense

More information

Financial Accounting (Sole Proprietorship)

Financial Accounting (Sole Proprietorship) Financial Accounting (Sole Proprietorship) This course covers the topics shown below. Students navigate learning paths based on their level of readiness. Institutional users may customize the scope and

More information

Century 21 Accounting, 8e General Journal Chapter Outlines

Century 21 Accounting, 8e General Journal Chapter Outlines Century 21 Accounting, 8e General Journal Chapter Outlines PART 1 Chapter 1 ACCOUNTING FOR A SERVICE BUSINESS ORGANIZED AS A PROPRIETORSHIP Starting A Proprietorship: Changes that Affect the Accounting

More information

FINANCIAL MANAGEMENT

FINANCIAL MANAGEMENT 100 Arbor Drive, Suite 108 Christiansburg, VA 24073 Voice: 540-381-9333 FAX: 540-381-8319 www.becpas.com Providing Professional Business Advisory & Consulting Services Douglas L. Johnston, II djohnston@becpas.com

More information

2/10, n/30. Chapter 7 16/10/2012. Read as: Two ten, net thirty. Accounting for Sales Revenue. Credit Card Sales to Consumers

2/10, n/30. Chapter 7 16/10/2012. Read as: Two ten, net thirty. Accounting for Sales Revenue. Credit Card Sales to Consumers Accounting for Sales Revenue Chapter 7 Reporting and Interpreting Sales Revenue, Receivables and Cash Copyright 2009 McGraw-Hill Ryerson Limited. All rights reserved. The revenue principle requires that

More information

REVIEW FOR EXAM NO. 3, ACCT-2301 (SAC) (Chapters 7-9)

REVIEW FOR EXAM NO. 3, ACCT-2301 (SAC) (Chapters 7-9) REVIEW FOR EXAM NO. 3, ACCT-2301 (SAC) (Chapters 7-9) A. Chapter 7. 1. Internal Control Objectives. a. Safeguards to protect assets. b. Procedures to insure reliable financial reports. c. Methods to insure

More information

Self-test Comprehensive Problems II 综 合 自 测 题 II

Self-test Comprehensive Problems II 综 合 自 测 题 II Self-test Comprehensive Problems II 综 合 自 测 题 II Part One (30%) 1. Give the Chinese/English of the following terms: (5%) subsidiary ledger 统 制 账 户 purchase requisition 现 金 溢 缺 petty cash fund 永 续 盘 存 制

More information

BUS312A/612A Financial Reporting I. Homework 10.6.2014 & 10.8.2014 Receivables Chapter 7

BUS312A/612A Financial Reporting I. Homework 10.6.2014 & 10.8.2014 Receivables Chapter 7 BUS312A/612A Financial Reporting I Homework 10.6.2014 & 10.8.2014 Receivables Chapter 7 Chapter 7- You should be able to: Identify elements of cash Identify the types of receivables Explain accounting

More information

Chapter 13 Financial Statements and Closing Procedures

Chapter 13 Financial Statements and Closing Procedures Chapter 13 - Financial Statements and Closing Procedures Chapter 13 Financial Statements and Closing Procedures TEACHING OBJECTIVES 13-1) Prepare a classified income statement from the worksheet. 13-2)

More information

Accounting for Merchandising Operations

Accounting for Merchandising Operations Instructor: masum 5-1 Bangladesh University of Textiles 5 Accounting for Merchandising Operations Learning Objectives After studying this chapter, you should be able to: [1] Identify the differences between

More information

2. A service company earns net income by buying and selling merchandise. Ans: False

2. A service company earns net income by buying and selling merchandise. Ans: False Chapter 6: Accounting For Merchandising Activities True/False 1. Merchandise consists of products that a company acquires for the purpose of reselling them to customers. 2. A service company earns net

More information

Learning Goal 26. bal. 62,300 3,000

Learning Goal 26. bal. 62,300 3,000 S1 Learning Goal 26 Multiple Choice 1. c Remember that any entry to the Accounts Receivable account also requires an entry to a subsidiary account. 2. b 3. d Only the direct write-off method debits an

More information

Financial Statements. Chapter 19 Study Guide

Financial Statements. Chapter 19 Study Guide Financial Statements Chapter 19 Study Guide Financial Statements Discuss the nature of a consolidated financial statement? Understand the relationship between the work sheet and the financial statements.

More information

EXERCISES. b. Johnson & Johnson: 3.3% ($333,000,000 $9,979,000,000)

EXERCISES. b. Johnson & Johnson: 3.3% ($333,000,000 $9,979,000,000) EXERCISES Ex. 8 1 Accounts receivable from the U.S. government are significantly different from receivables from commercial aircraft carriers such as Delta and United. Thus, Boeing should report each type

More information

Hoover City Schools Secondary Curriculum Document Career Technical Education, 2009-2010

Hoover City Schools Secondary Curriculum Document Career Technical Education, 2009-2010 Links to Document Content: HCS Curriculum: Career Technology 9 Hoover City Schools Secondary Curriculum Document Career Technical Education, 009-00 Basic Course Information Instructional Sequence Instructional

More information

中 原 大 學 95 學 年 度 轉 學 考 招 生 入 學 考 試

中 原 大 學 95 學 年 度 轉 學 考 招 生 入 學 考 試 中 原 大 學 95 學 年 度 轉 學 考 招 生 入 學 考 試 7 月 12 日 14:00~15:30 商 學 群 組 二 年 級 科 目 : 會 計 學 ( 共 七 頁 第 一 頁 ) 可 使 用 計 算 機, 惟 僅 限 不 具 可 程 式 及 多 重 記 憶 者 一 MULTIPLE CHOICE QUESTIONS: (50%) 誠 實 是 我 們 珍 視 的 美 德, 我 們 喜

More information

Flashcards for Chapter 6 Introduction to Working Capital Management [ ]

Flashcards for Chapter 6 Introduction to Working Capital Management [ ] Flashcards for Chapter 6 Introduction to Working Capital Management [ ] [Type the abstract of the document here. The abstract is typically a short summary of the contents of the document. Type the abstract

More information

Financial Reporting and Analysis Chapter 8 Solutions Receivables. Exercises

Financial Reporting and Analysis Chapter 8 Solutions Receivables. Exercises Exercises E8-1. Account analysis (AICPA adapted) Financial Reporting and Analysis Chapter 8 Solutions Receivables Exercises To find the amount of gross sales, start by determining credit sales. We can

More information

Chapter 14. 1 Copyright 2012 Pearson Education, Inc. Publishing as Prentice Hall.

Chapter 14. 1 Copyright 2012 Pearson Education, Inc. Publishing as Prentice Hall. Chapter 14 1 Identify the purposes of the statement of cash flows Distinguish among operating, investing, and financing cash flows Prepare the statement of cash flows by the indirect method Identify noncash

More information

Learning Objectives: Quick answer key: Question # Multiple Choice True/False. 14.1 Describe the important of accounting and financial information.

Learning Objectives: Quick answer key: Question # Multiple Choice True/False. 14.1 Describe the important of accounting and financial information. 0 Learning Objectives: 14.1 Describe the important of accounting and financial information. 14.2 Differentiate between managerial and financial accounting. 14.3 Identify the six steps of the accounting

More information

ACC 255 FINAL EXAM REVIEW PACKET (NEW MATERIAL)

ACC 255 FINAL EXAM REVIEW PACKET (NEW MATERIAL) Page 1 ACC 255 FINAL EXAM REVIEW PACKET (NEW MATERIAL) Complete these sample exam problems/objective questions and check your answers with the solutions at the end of the review file and identify where

More information

Walk Through Balance Sheet. Chapter 7. Learning Objectives. Learning Objectives 1, 2. Learning Objectives 1, 2. Cash and Receivables.

Walk Through Balance Sheet. Chapter 7. Learning Objectives. Learning Objectives 1, 2. Learning Objectives 1, 2. Cash and Receivables. Chapter 7 Walk Through Balance Sheet Cash and Receivables Chapters 1 6 Accounting cycle: JE, AJE, financial stmts Conceptual framework, GAAP, revenue Time value of money concepts Remaining chapters (ACTG

More information

ACCT Final Exam Notes

ACCT Final Exam Notes LO1: Identify the different types of receivables. - The term receivables refers to amounts due from individuals and businesses. They are claims expected to be collected in cash and are important, as they

More information

Report Description. Business Counts. Top 10 States (by Business Counts) Page 1 of 16

Report Description. Business Counts. Top 10 States (by Business Counts) Page 1 of 16 5-Year County-Level Financial Profile Industry Report Architectural Services (SIC Code: 8712) in Prince George County, Maryland Sales Range: $500,000 - $999,999 Date: 11/07/08 Report Description This 5-Year

More information

Merchandise Accounts. Chapter 7 - Unit 14

Merchandise Accounts. Chapter 7 - Unit 14 Merchandise Accounts Chapter 7 - Unit 14 Merchandising... Merchandising... There are many types of companies out there Merchandising... There are many types of companies out there Service company - sells

More information

Ch5. Student: 2. At the time of a credit sale, a company would record an increase in assets and an increase in revenues.

Ch5. Student: 2. At the time of a credit sale, a company would record an increase in assets and an increase in revenues. Ch5 Student: 1. Credit sales transfer products and services to a customer today while bearing the risk of collecting payment from that customer in the future. 2. At the time of a credit sale, a company

More information

ICAP GROUP S.A. FINANCIAL RATIOS EXPLANATION

ICAP GROUP S.A. FINANCIAL RATIOS EXPLANATION ICAP GROUP S.A. FINANCIAL RATIOS EXPLANATION OCTOBER 2006 Table of Contents 1. INTRODUCTION... 3 2. FINANCIAL RATIOS FOR COMPANIES (INDUSTRY - COMMERCE - SERVICES) 4 2.1 Profitability Ratios...4 2.2 Viability

More information

Financial/Accounting Analysis Ratios Excel Calculator

Financial/Accounting Analysis Ratios Excel Calculator User Guide Financial/Accounting Analysis Ratios Excel Calculator Dec 2008 Version 2 copyright 2008 Business Tools Templates Financial/Accounting Analysis Ratios Excel Calculator Financial Analysis Ratios

More information

Chapter 04 - Accounting for Merchandising Operations. Chapter Outline

Chapter 04 - Accounting for Merchandising Operations. Chapter Outline I. Merchandising Activities Products that a company acquires to resell to customers are referred to as merchandise (also called goods). A merchandiser earns net income by buying and selling merchandise.

More information

Income Measurement and Profitability Analysis

Income Measurement and Profitability Analysis PROFITABILITY ANALYSIS The following financial statements for Spencer Company will be used to demonstrate the calculation of the various ratios in profitability analysis. Spencer Company Comparative Balance

More information

Basic Accounting Principles

Basic Accounting Principles Basic Accounting Principles Basic Accounting Model The basic accounting model represents the relationship between assets (what the company owns), liabilities (what the company owes), and owner s equity

More information

Guide to Financial Ratios Analysis A Step by Step Guide to Balance Sheet and Profit and Loss Statement Analysis

Guide to Financial Ratios Analysis A Step by Step Guide to Balance Sheet and Profit and Loss Statement Analysis Guide to Financial Ratios Analysis A Step by Step Guide to Balance Sheet and Profit and Loss Statement Analysis By BizMove Management Training Institute Other free books by BizMove that may interest you:

More information