Accpunting+Ch+5

Accpunting+Ch+5 - Chapter Five Short-term Investments...

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Chapter Five Short-term Investments Accounts Receivable and Accounting for Uncollectible Receivables Notes Receivable Ratios
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Short-term Investments Short-term investments are investments that a company plans to hold for 1 year or less. Trading Investments -: investments that are intended to be sold in short term Current Assets Shown at current market value
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Types of Receivables Receivable- monetary claims against others Types Accounts Receivable- due from customers on credit sales Notes Receivable- written promise to pay a specified amount of money either on demand or at a definite future date Other-: Interest rec, rent rec, tax refund rec
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Accounts Receivable Generated from credit sales Entry: A/R Sales Reduced by customer payments Entry: Cash A/R An acct rec ledger is a supplementary record providing info on each customer
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Valuing Accounts Receivable Uncollectible accounts- accounts that are not paid by customers as promised 2 methods to account for uncollectible accounts: Direct write-off method Allowance Method
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