Notes Chapter 8

Notes Chapter 8 - Notes Chapter 8 I. Types of Receivables...

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Notes Chapter 8 I. Types of Receivables a. Receivables- amounts due from individuals and companies; claims that are expected to be collected in cash. a.i. Accounts receivable- amounts customers owe on account(30-60 days) a.ii. Notes receivable- formal instruments of credit are issued as evidence of the debt(60-90 days) a.iii. Trade receivables- notes and accounts receivable that result from sales transactions a.iv. Other receivables- interest receivable, loans to company officers, advances to employees, income taxes refundable II. Accounts Receivable a. Problems: a.i. Recognizing accounts receivable a.i.1. Service org = when service provided; merchandiser = point of sale a.ii. Valuing accounts receivable a.ii.1. Sometimes hard because some receivables will be uncollectible a.ii.2. Bad Debts Expense—“uncollectible accounts expense” a.ii.2.a. Direct Write-off method: charges account to Bad Debts a.ii.2.a.i. Problem: unless a company expects bad debt losses to be insignificant, this method is not acceptable. a.ii.2.b.
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This note was uploaded on 11/21/2011 for the course BUS 214 taught by Professor Waker during the Winter '08 term at Cal Poly.

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Notes Chapter 8 - Notes Chapter 8 I. Types of Receivables...

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