A/R Flashcards
Financial assets that represent a contractual right to receive cash or another financial asset from another entity
Receivables
Claims arising from sale of merchandise or services in the ordinary course of business
Trade receivables
Trade receivables include
Accounts receivable and Notes receivable
Arising from the sale of goods and services in the ordinary course of business and not supported by promissory notes
Accounts receivable
Supported by formal promises to pay in the form of notes
Notes receivable
Arising from sources other than the sale of merchandise or services in the ordinary course of business
Nontrade receivables
Trade receivables are classified as current assets and
are expected to be realized in cash within the normal operating cycle or one year, whichever is longer
Nontrade receivables are classified as current assets if
it is expected to be realized within one year, the length of the normal operating cycle notwithstanding.
Nontrade receivables are classified as noncurrent assets if
it is collectible for more than one year
What are the 8 examples of nontrade receivables?
- Advances to or receivables from shareholders, directors, officers employees
- Advances to affiliates
- Advances to suppliers
- Subscription receivable
- Creditors’ accounts with debit balances
- Special deposits
- Accrued income
- Claims receivable
Accounts receivables are initially measured at
face amount or original invoice amount
After initial recognition, a/r shall be measured at
amortized cost
What are the two methods in recording a/r and credit sales?
Gross and Net method
What is gross method?
The a/r and sales are recorded at gross amount of the invoice
What is net method?
The a/r and sales are recorded at net amount of the invoice (invoice price minus cash discount)
