Intacc Chapter 4: Accounts Receivables Flashcards
This is the right of an entity to obtain cash from another entity.
Receivable
When an entity has a receivable, it is said to be the ____________ of its counterpart.
Creditor
What are the two types of receivables?
Trade Receivables
Non-trade receivables
These are the receivables arising from the primary revenue-generating activities of an entity.
Trade Receivables
These are the receivables arising from activities other than the primary revenue-generating activities of an entity.
Non-trade Receivables
Which kind of receivable cover a broader scope of receivables?
Non-trade receivables
This receivable arises from the rendering of service or selling of inventories on credit.
Accounts Receivables
This is a variation of accounts receivable. It arises from the selling of high value inventories such as vehicles, house, and lots.
Installment Receivable
This arises from the same transactions as accounts receivables. However, this is supported by a formal document called promissory note.
Notes Receivable
What is the formal document that supports a note receivable?
Promissory Note
If a note receivable arises from a transaction other than the rendering of a service or of selling of goods, is it still considered as a trade receivable?
No.
This arises from the lending of funds to borrowers.
Loans receivable
When can a loan receivable be considered as a trade receivable?
Only when the primary activities of the entity include lending of funds to earn interest. In other words, if the entity is a financial institution like banks and lending companies.
These are loans granted to employees and officers that are periodically deducted from their salaries.
Advances to employees and officers
These are usually the down payments required by suppliers before shipping out the entity’s orders of inventory.
Advances to suppliers
