4.15 Other Receivables and Payables

Question 1

What is receivables?

Answer 1

• customers who still owe the business money.

Question 2

What is payables?

Answer 2

• suppliers who we still owe money to the business.

Question 3

What are the steps to dealing with further adjustments to financial statements?
(other receivables/ other payables/ discount allowed and received)

Answer 3

1. Other receivables
   ( deduct it from the expense account if prepaid)
   ( SOFP:- amount of prepayment in the current assets section directly under trade receivables prepaid expense: XXX)
2. Other payables
   ( Accrued: have to add to the appropriate expense account- I/S)
   ( SOFP :- other payables amount in the current liabilities section directly under the trade payables)
3. Discount allowed and received

Question 4

What are the steps to dealing with further adjustments to financial statements?
(Depreciation)

Answer 4

4. Depreciation:– Depreciation amount in expense in I/S
   (Straight line method: - (cost x percentage given))
   (Reducing balance:- (cost - accumulated depreciation) x percentage given)
   I/S:- expense
   SOFP: - cost - accumulated depreciation

Question 5

What are the steps to dealing with further adjustments to financial statements?
(recording allowance for irrecoverable debts)

Answer 5

1. Creating allowance:
   I/s - expense
   SOFP :- Current assets -trade receivables= tr - the allowance irrecoverable debts
2. Increasing the allowance:-
   - calculate New allowance
   - Check last year’s allowance
   - Find the difference: NA- LYA
   -I/S- difference: NA- LYA
   - SOFP - trade receivables - NA
3. Reducing the allowance:
   - decided to reduce the allowance
   - Old allowance - New allowance = X
   - I/S - X as income
   - SOFP - deduct the new allowance from irrecoverable debts from trade receivables

Question 6

what are other receivables?

Answer 6

• amounts paid in advance.

Question 7

what are other payables?

Answer 7

• amounts owing