Financial Act Chpt 8 Notes

Good internal control procedures over accounts

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Unformatted text preview: om loss or theft. Good Internal Control Procedures over Accounts Receivable: • Require approval of customer's credit before a sale is completed. Customer credit should be approved by the credit manager-NEVER the salesperson! • Age accounts receivable and be proactive in collecting accounts that are past due Receivables turnover ratio: Analyzes how quickly accounts receivable are collected in relation to net sales. Net Sales/Average net trade accounts receivable • Average Collection Period = 365/Receivables turnover • Notes receivable: Usually longer term than an accounts receivable. • Has a written promissory note from a customer that the customer will pay the company. • Principal: The amount loaned by the company that is owed to them. • Interest: Revenue the company will earn from the debtor for loaning the money. • Maturity date: date in which...
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