Notes Ch 7

Notes Ch 7 - Jorge Rossello Busi 100 Chapter 7 Notes I....

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Jorge Rossello Busi 100 Chapter 7 Notes I. Accounts Receivable and Net Realizable Value a. Accounts Receivable: An asset that reports amounts generated by credit sales that are still owed to an organization by its customers. b. Net Realizable Value: The amount of cash that is expected to be generated by an asset after costs necessary to obtain the cash are removed. For accounts receivable; the amount an organization estimates it will ultimately collect from its customers. II. Accounting for Uncollectible Accounts a. A/R T-account monitors total due from all customers. b. A second account ( allowance for doubtful accounts ) reflects the estimated amount that will eventually have to be written off as uncollectible. i. This account is an example of a “ contra account, ” one that always appears with another account but as a direct reduction to lower the reported value. c. If receivables are recorded that will eventually have to be removed because they can’t be collected, an expense occurs. This is termed the
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This note was uploaded on 04/26/2011 for the course BUSI 100 taught by Professor Unknown during the Spring '07 term at UNC.

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Notes Ch 7 - Jorge Rossello Busi 100 Chapter 7 Notes I....

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