KIC000078 - I CHAPTERS Reporting and Interpreting...

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L CHAPTERS Reporting and Interpreting Receivables, Bad Debt Expense, and Interest Revenue ",,' l84 Types of Receivables )-Accounts receivable arise from sales of goods or services on credit ~ Notes receivable is a formal written contract outlining the terms by which a company will receive amount owed, including a due date (maturity date). Notes receivable typically include interest. >t Bad Debt Expense~ ~ If a company extends credit to customers, it is inevitable that some ofthem will not pay. .> The company will not know until often much later who it is that is not going to pay. ;;.The accounting issue is how to charge the cost of these bad debts (customers who default on accounts receivable) to the same period in which the sales are generated »- The solution is to estimate the amount of accounts that will ultimately be uncollectible and match against revenues in the period the sale is made. Chop.S
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This note was uploaded on 09/01/2011 for the course ACCT 284 taught by Professor Clem during the Fall '08 term at Iowa State.

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KIC000078 - I CHAPTERS Reporting and Interpreting...

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