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
Are trade receivables part of current assets? Why?
Yes, because they are collectible within 1 year or within the operating cycle of the entity, whichever is longer.
Are non-trade receivables part of current assets? Why?
The portion that is collectible within one year (after the reporting date) is considered as a current asset.
The portion, however, that is not collectible within 1 year form part of concurrent assets.
What receivables are presented in the current assets section of the SFP?
The trade receivables and the current portion of the non-trade receivables.
What single item line do trade receivables and the current portion of the non-trade receivables belong under?
Trade and Other Receivables
On initial recognition, receivables are measured on what value?
Fair value
How are trade receivables, with no significant financing component, measured?
They are measured equally to the transaction price.
This is the total amount that the entity is entitled to receive, which is usually equal to the selling price of the related goods or services.
Transaction price
This method of accounting accommodates the theoretical separate recognition of financing income.
Net method
At the end of the reporting period, what value should be used to measure accounts receivable?
At net realizable value
How are sales returns expected by the entity?
Sales returns are expected by the entity using its best and reasonable inputs, primarily from past experiences, but adjusted with expectations from the future
Who is the owner of the in-transit goods and the one liable to pay the freight in FOB Shipping Point?
Buyer, Buyer
Who is the owner of the in-transit goods and the one liable to pay the freight in FOB Destination?
Seller, Seller
What freight is when the seller pays the freight amount upon shipment?
Freight prepaid
What freight is when the buyer pays the freight amount upon receipt?
Freight collect
