Chapter_8_AR_and_Receivables

Chapter_8_AR_and_Receivables - ACCT 100 Chapter 8 Accounts...

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ACCT 100 Chapter 8 Accounts Receivable and Notes Receivable Fall 2010 Accounting for Sales Revenue Revenue Recognition Principles (Staff Accounting Bulletin #101) Each of the following criteria must be met before revenue can be recognized: 1. Persuasive Evidence of an Arrangement (i.e., contract) 2. Delivery has occurred or services performed 3. Selling Price is fixed or determinable 4. Collectibility is reasonably assured *** The point at which the title of the goods transfers from the seller to the buyer also comes into play. There are two types of situations: FOB shipping point - title changes hands at shipment, and the buyer normally pays for shipping and insurance, etc. FOB destination point - title changes hands upon delivery of goods, and the seller normally pays for shipping and insurance, etc. Measuring and Reporting Receivables Accounting for bad debts Uncollectible Accounts (note that the presentation and terminology differ slightly than what’s presented in the text-just go with what I’ve got here and you’ll be fine) : a. Direct Write-off Method: Accounts are written off by management when a specific customer balance is uncollectible; this may not occur during the same accounting period in which the related credit sale was recorded (and revenue recognized). Provides management with the opportunity to manage earnings across multiple accounting periods. GAAP attempts to curtail earnings management in this context by only allowing the direct write-off method when the uncollectible customer balances are insignificant (i.e., immaterial), as verified by the external auditors. Example of write off-
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This note was uploaded on 09/09/2011 for the course ACCT 100 taught by Professor Ftom during the Spring '08 term at S.F. State.

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Chapter_8_AR_and_Receivables - ACCT 100 Chapter 8 Accounts...

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