ACIS-2115 - Reading Notes - 8-1 - Accounts Receivable PDF

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Summary

This is a common taught course. All sections of ACIS 2115 follow the same schedule and cover the same content.
Prof: L Almond
Reading for section 8.1...

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Daniel T. Eisert

ACIS-2115

8.1 – Accounts Receivable ACIS-2115: Principles of Accounting October 20, 2019 (Week 9)

Types of Receivables

Accounts receivable are amounts customers owe on account. They result from the sale of goods or services. Companies generally expect to collect them within 30-60 days. Notes receivable are a written promise for amounts to be received. The note normally requires collection of interest and extends for time periods of 60-90 days or longer. Notes and accounts receivable that result from sales transactions are often called trade receivables.

Recognizing Accounts Receivable

Other receivables include nontrade receivables such as interest receivable, loans to company offiers, advances to employees, income tax refundable, etc. They do not generally result from the operations of the business, so they are reported as separate items in thebalance sheet. Recall ~ a service organization records a receivable when it performs a serive on account. A merchansider records accounts receivable at the point of sale of merchanize on account. When a merchandiser sells goods, it increases (debits) accounts receivable and increases (credits) sales revenue.

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