acct chapter 7 - Reporting and Analyzing Receivables I....

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Reporting and Analyzing Receivables I. Receivables A. Amounts due from another party B. Types 1. Accounts receivable: amounts due from customers for credit sales 2. Notes receivable II. Credit sales A. Maintain a separate account receivable for each customer who makes a purchase on credit 1. Exact amount due from a customer is clear at any time 2. Keeps a record of customers who have accumulated bad debts 3. Maintained in the accounts receivable ledger a) Debited when AR increases and credited when AR decreases B. Types 1. Direct credit sales to customers a) Some customers will not pay off the accounts they accumulate so bad debts are accumulated * Cost of attempted collection > benefit of collection b) When an AR becomes uncollectable, a firm incurs a bad debt loss * Reflect by writing off or removing a receivable from the book’s assets 2. Sales to customers who use credit cards a) Seller accumulates credit card receipts and deposits them in the bank b) The bank deducts a percentage from the receipts sum for service fees and
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This note was uploaded on 02/09/2012 for the course ACCT 1310 taught by Professor Staff during the Fall '10 term at Texas State.

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acct chapter 7 - Reporting and Analyzing Receivables I....

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