40 - • Separate cash-handling from cash-accounting duties...

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Reporting on Financial Statements Balance Sheet Trading Investment Reported at current market value Listed directly under “cash” in the current asset section Income Statement Gains and losses From sales of investments Investment revenue From dividends or interest earned Unrealized gain or loss From entry to adjust to market value Receivables Monetary claims against others Third most liquid asset Accounts Receivable Amounts owed by customers for selling goods or services Notes Receivable Lending money to outsiders More formal than accounts receivable Internal Control over Cash Collections on Account
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Unformatted text preview: • Separate cash-handling from cash-accounting duties • Cash-handling One person receives customer checks and makes deposits • Cash-accounting Another person makes entries to customer accounts Accounting for Uncollectible Receivables • Extending credit to customers bears some risk • Risk: Some customers do not pay the amount owed • Cost: Uncollectible accounts Allowance Method • Amount of uncollectible accounts is estimated • An expense is recorded as part of the adjusting process • A contra-asset is recorded that reduces accounts receivable on the balance sheet...
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