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Account
Describe how accounts receivable arise and how they are accounted for, including the use of a subsidiary ledger and an allowance account.
Accounts receivable arise from credit sales to customers. Accounts receivable are reported at their realizable value, which is their total amount less an estimate for the amount of uncollectible accounts. Accounts receivable are also recorded into an accounts receivable subsidiary ledger that separately lists amounts owed by individual customers. Example: X company sells its products of $1,000 to Y, and y assures that he will pay the same in the time period of 30 days then the accounts receivable are debited and sales are credited for the same amount i.e. $1,000.
All the balances of accounts receivable are transferred to the general ledger, and the subsidiary ledger is used to verify the general ledger. The subsidiary ledger is called the control account as it mentions all the details of accounts receivable of the company which is stated customer wise. It helps in giving a clear picture of amount that the company is likely to receive. The two general ledger accounts that act as control accounts for a subsidiary ledger are accounts payable and accounts receivable. These accounts act as a crosscheck of the accuracy of the subsidiary accounts. The general ledger will only include the total amount of accounts payable or accounts receivable. The subsidiary ledgers will give you the specifics of each entry (who, how much, how often) that makes up the total found in the general ledger.
Allowance account is basically a contra asset account which reduces the balance of accounts receivable that a company is likely to collect. The allowance account is a contra account to accounts receivable, the actual bad debts of $35,000 are debited to the allowance account as they are written off. The expense recorded in the statement of comprehensive income therefore represents the balance-day adjustment upon assessment of the recoverability of the accounts receivable. It includes the amount that is unlikely to be collected. While analyzing the amount that the company is likely to collect there is a particular percentage that is unlikely to be collected and the same reduces the balance of accounts receivable. It helps in bringing a realistic picture of accounts receivable.
Accts Receivable Accounts receivable reflects credit that has been extended to customers. The positive aspect is that it represents a sale that has been made; the negative is that it represents a sale that has not been paid for. There are a number of benefits to extending credit, but there also drawbacks. Thus, companies need to pay special attention to how they manage their accounts receivable. Effectively management of accounts receivable can
Finance Management (Discussion questions) First student Accounts receivable (AR) Accounts receivable (AR) refers to the means by which companies record sales and send statements and bills to their customers. In simple terms, AR keeps track of the customers' unpaid bills and the company's revenues. When sales are recorded, invoices are sent to customers. Apart from the total debt owed by customers, invoices contain information about discounts offered by the company to customers as
Kudler's System integrity Validation Describe selected computer assisted auditing techniques validate data system integrity system. Explain functions audit productivity software. Explain audit productivity software systems designed Kudler's system integrity validation The essay gives a detailed information on how computer assisted auditing technique can be used in the validation of data and system integrity within an accounting information system, the functions of audit productivity and an account of the audit productivity software used
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Security Monitoring Strategies Creating a unified, enterprise-wide security monitoring strategy for any organization must be based on a series of strategic goals and objectives that encompass every functional area and system of a business. The intent of this analysis is to define the objectives that must anchor a security monitoring strategy to ensure its success, followed by specific recommendations for security monitoring of each major functional area. Defining Security Monitoring Strategies For an
Financial Accounting Costa Company Income Statement Revenue COGS Gross Profit less Depreciation Expense Insurance Marketing Misc Exp Property Taxes Rent Salaries Utilities Operating Expenses Net Income Balance Sheet Assets Cash Accounts Receivable Inventory Equipment Total Assets Liabilities Accounts Payable Long-Term Debt Total Liabilities Shareholders' Equity Common Stock Paid-In Capital Retained Earnings Total Equity Total L&SE With these two statements, there are two adjustments that have been requested. The $12,000 check cannot be processed yet. The sale needs to be recorded. The problem is that the sale will include inventories that moved, but without knowing what inventories were moved and what the markup would be,