8.1 Reporting Recievbale

Question 1

how do credit losses occur

Answer 1

when customers dont pay accounts receivable

Question 2

what is a receivable

Answer 2

amounts that are owed to a company by its customers, employees, the govt, and others

Question 3

3 charactersistics of a recievable

Answer 3

1) expected to be collected in cash
2) the management of recievables is important for companies that sell on credit
3) receivables are considerd financial assets

Question 4

what are financial assets

Answer 4

a contractual right to recieve cash or another financial asset

Question 5

why do we care so much about recievables

Answer 5

because they represent some of the most liquid assets

Question 6

3 types of receivables

Answer 6

A/R
N/R
Other

Question 7

A/R

Answer 7

-owed by customers
-result from a sale on account
-collected w/n 30-60 days and are subject to credit terms

Question 8

N/R

Answer 8

written promises to repay debt

they require payment of interest and due >30 days

Question 9

are notes receiveable current asset or nca

Answer 9

depends on when they are due

Question 10

a/r and n/r that result from sales transactions are called what

Answer 10

trade receivacbles

Question 11

what are other receivables

Answer 11

-non trade receivables
-do not result form normal operations of business

EX: interest receivable, loans to company officers, advances to employees, sales tax recoverable, income tax receivable etc

Question 12

When is a receivable recorded for a service company

Answer 12

when a service is provided on account

Question 13

When is a receivable recorded for a merchandising company

Answer 13

at the pos of merchandise on account

Question 14

How do we record accounts receivable

Answer 14

-initially at their transaction price (Dr A/R for the full amount)
-And then reduce the transaction price by variable consideration (CR Sales and then also the % of refund liability)

Question 15

how do large companies manage all their acccounts receibable

Answer 15

in a subsidiary ledger (so accounts dont get mixed up)

Question 16

what is a subsidiary ledger/subledger

Answer 16

manages detailed info that would be hard to track in a general ledger account
-> account detail for each of a companys customers

Question 17

how is a subledger linked to the rest of the general ledger?

Answer 17

by a single general ledger account (so A/R)

In the subledger, you have diff accounts for all the customers, and then you sum up all the A/R into one A/R account

Question 18

In the subledger, you have diff accounts for all the customers, and then you sum up all the A/R into one A/R account

Answer 18

In the subledger, you have diff accounts for all the customers, and then you sum up all the A/R into one A/R account

Question 19

an entry cannot be made to a control account without making an entry in the subsidiary ledger, nor can an entry be made in the subsidiary ledger without making a corresponding entry in the control account.

Answer 19

!!! subledger entry = control account entry

Question 20

what accounts have subledgers?

Answer 20

a/r, inventory, a/p, payroll

Question 21

subledger link with general ledger?

Answer 21

all debits summed up in genledg and all credits summed up in genledg

Question 22

when filling out the sub ledger, do you do it in someones perspective?

Answer 22

NNO!!! you do it in the reglar way of accounts receivable (dr increase and cr decrease)