CHAPTER 13 Flashcards

The Receivable Ledger

1
Q

Credit control

A
  • Credit limit
  • Aged receivable analysis
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2
Q

Benefits of credit facilities

A

Allow business to keep trading without paying cash ‘up front’

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3
Q

Cost of offering credit facilities

A

1) Interest cost of an overdraft
2) Cost of trying to obtain payment
3) Court cost

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4
Q

Does PERSONAL account forms part of double entry system

A

No ! If they did, transaction would be recorded twice !!

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5
Q

Age analysis of receivables

A

Breaks down customer balances on the receivable ledger into different periods of outstanding debts

–> decide which debt to chase up
–> general guide whether debts are being collected quickly enough

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6
Q

Reasons to write off Irrecoverable Debts

A
  • Bankrupt
  • Out of business
  • Dishonesty
  • Customer from another country prevented from paying due to sudden foreign exchange control

* writing off IRD needs authorisation !!

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7
Q

Can sales tax on IRD be claimed ?

A

Yes , if and only if :-

  • At least 6 months old
  • Written off
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8
Q

Allowance for receivables

A

Estimate of the percentage of debts which are not expected to be paid

–> Specific
OR
–> Percentage

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9
Q

Increase in AFR is treated as …??

A

Expense

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