Chapter 4: Accounts Receivable Flashcards
To know the measurement, adjustments, methods and acctg. treatment.
T/F
Dishonored Receivables and Overdue Notes are included as part of Notes Receivable in SFP.
False
T/F
An entity shall classify an aset as current when the entity expects to realize the asset or intends to sell or consume it in the entiy’s normal operating cycle , or when the entity expects to realize the asset within twelve months after the reporting period.
True
T/F
Nontrade receivables are classified as nocurrent assets if collectible beyond one year.
True
T/F
Accounts Receivable known as “Cutomer’s accounts”
True
T/F
Customer’s credit balances are classified as current Liabilities.
True
T/F
The initial amount recognized for accounts receivable shall be reduced by adjustments which in the ordinary course of business reduce the amount recoverable from the customer
T
T/F
The gross methid is the common and widely used method because it is simple to apply.
T
T/F
Cash flows relating to short-term accounts receivable are discounted.
F
T/F
A cash discount is a reduction from an invoice price by reason of prompt payment.
T
T/F
Advances to affiliates are Noncurrent Investments.
T
T/F
Trade Receivables which are expected to realize in cash within the normal operating cycle or one year, whichever is longer, are classified as current assets.
T
T/F
Special deposits on contract bids classified as noncurrent assets
T
T/F
Advances to suppliers are noncurrent assets
F
T/F
Assets shall becarried at above their recoverable amount
T
T/F
If the customer fails to pay within the 10-day discount period, the gross amount of the invoice price must be paid within 30 days from the invoice date.
True
T/F
Claims receivable are noncurrent assets.
F
T/F
The details of the total trade and other receivables shall be disclosed in the notes to financial statements.
True
T/F
Dividend receivable, accrued rent receivable, accrued royalties receivable, and accrued interest receivable are noncurrent assets.
F
T/F
Accounts receivable shall be recognized initially at amortized cost.
F
T/F
In net method, the accounts receivable are recorded at the cash disount minus the invoice price whether taken or not taken.
F
T/F
In the abscence of any contrary statement, doubtful acounts should be classified as administrative expense.
T
T/F
The Direct Writeoff methof is not permitted under IFRS.
T
T/F
The Direct writeoff approach is often used by small businesses because it is simple to apply.
T
Requires recognition of a bad debt loss only when the accounts proved to be worthless.
Direct Writeoff Method
The common and widely used method because it is simple to apply.
Gross Method
Is the amount of cash expected to be collected or the estimated recoverable amount.
NRV
Those Supported by formal Promises to pay in the form of notes.
Notes Receivable
Those Supported by formal Promises to pay in the form of notes.
Notes Receivable
Means that frieght charge on the goods shipped is already paid by the seller.
Freight Prepaid
The subsequent measurement of accounts receivable.
Amortized Cost
Trade receivables and nontrade receivables which are currently collectible shall be presented on the face of statement of finacial position as “one line item” called _______________.
Trade and other receivables
A Cash Discount is known as ____________ on the part of seller and a ________________ on the part of buyer.
Sales Discount
Purchase Discount
Is a financial asset that represents a contractual right to receive cash or another financial asset.
Receivable
Means that ownership of the goods purchased is vested in the buyer upon receipt thereof.
FOB Destination
Is an Unconditional written agreement to pay a certain sum to pay a certain sum of money on a specific or determinable date to order of the payee or the bearer.
Negotiable Promissory Note
Refers to claims arisign from sale of Merchandise or Services in the onrdinary course of business.
Trade Receivables
Are open account; Not supported by a promissory notes.
Accounts Receivable
Requires the recognition of a bad debts loss if the accounts are doubtful of collection.
Allowance Method
Means that freight charge on the goods shipped is not yet paid.
Freight collect
The initial measurement of accounts receivable.
Fair Value Plus Transaction Costs
Means that ownership of the goods purchased is vested in the buyer upon shipment thereof.
FOB Shipping Point
Are credit balances in accounts receivable resulting from overpayments, returns, and allowances and advance payments from customers.
Customers’ credit balances
Nontrade receivables which are expected to be realized in cash within one year classified as ___________.
Current Assets
Known as Customer’s accounts, trade debtors and trade accounts receivable.
Accounts Receivable
The _________________ account is classified as “other income”.
Sales Discount forfeited
If the granting of credit and collection of accounts are under the charge of an officer other than sales manager, doubtful aacounts shall be considered as _________?
Administrative Expense
If the granting of credit and collection of accounts are under the charge of an sales manager, doubtful aacounts shall be considered as _________?
Distribution Cost
What are the two accounting for bad debts?
- Allowance Method
- Direct Writeoff Method
What are 2 Standards found in Receivables?
PFRS 15
PFRS 9
What are the 4 kinds of treatment when estimating the net realizable value of accounts receivable.
Allowance for freight charge
Allowance for sales return
Allowance for sales discount
Allowance for doubtful accounts
Methods of recording Credit Sales
1.Gross Method
2. Net Method
Classification of Receivables
- As to source
- As to SFP
The journal entry when collection is made beyond the discount period under Net Method.
Cash
Accounts Receivable
Sales Discount Forfeited
The journal Entry when collection is made within the discount period under Net Method.
Cash
Accounts Receivable
The journal entry when “the accounts proved to be worthless”.
Bad Debts
Accounts receivable
The JE when “The accounts that are previously written off as worthless are recovered or collected”.
AR
Bad debts
Cash
AR
JE when “The accounts that are previously written off as worthless are unexpectedly recovered or collected”.
AR
ABD
Cash
AR
The journal entry when collection is made within the discount period under Gross Method.
Cash
Sales Discount
Accounts Receivable
The journal entry when “the accounts subsequently discovered to be worthless”.
Allowance for Bad Debts
Accounts receivable
The journal entry when collection is made beyond the discount period under Gross Method.
Cash
Accounts Receivable
