Accounts Receivable- Accounting and Reporting

Question 1

Define Accounts Receivable:

Answer 1

Represents the sale of goods or services to a customer on “account”

Does not have an interest element

Question 2

Tested?

Answer 2

Calculation of amounts related to recording AR

Journal Entry

Calculation of allowance for doubtful accounts

Question 3

How is AR Presented on the Balance Sheet

Answer 3

Net Realizable Value

Question 4

What is a reinstatement?

Answer 4

A reinstatement is when a company writes-off a balance and you received the money back from a cash collection agency

Question 5

What are trade discounts

Answer 5

Discounts offered for high volume or quantity

Question 6

What is a cash discount

Answer 6

Cash discounts- discounts for early payment

Question 7

Sales returns and allowances

Answer 7

Item that is returned or damaged

Question 8

What is the gross method vs net method

Answer 8

A company has the option of recording receivables at either gross or net amount of potential discounts

Question 9

What is sales returns and allowances

Answer 9

It is a contra account to sales but it also impacts A/R. It is when people change their mind or damaged merchandise.