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Accounts Payable is a liability. Accounts receivable is an asset.
Bad debt is expense to reduce the amount of accounts receivable not recoverable from customers.
No while using allowance method, bad debts are charged to allowance for bad debts account rather charging the accounts receivable because accounts receivable was already charged with allowance when it was created.
account receivable- money coming in for profit account payble-money going out for a expense
No. Because it is calculated as a percentage of accounts receivable or net income it will be variable.
Accounts Payable is a liability. Accounts receivable is an asset.
Accounts Receivable
Bad debts expense is also use to write off accounts receivable and not for loans receivables.
Bad debt is expense to reduce the amount of accounts receivable not recoverable from customers.
net Accounts Receivable will be overstated.
No while using allowance method, bad debts are charged to allowance for bad debts account rather charging the accounts receivable because accounts receivable was already charged with allowance when it was created.
account receivable- money coming in for profit account payble-money going out for a expense
No. Because it is calculated as a percentage of accounts receivable or net income it will be variable.
Any account on the balance sheet is a permanent account - 'Cash', 'Accounts Receivable', 'Accounts Payable'. Income and expense accounts are temporary accounts because they are closed at the end of an accounting period. Examples are: 'Service Revenue', 'Office Expense', and, my personal favourite, 'Meetings and Entertainment Expense'.
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Typically, nominal accounts are closed on a periodic basis..iincome and expense are nominal accounts. Real accounts ...such as cash, accounts receivable, accounts payable are real accounts are not closed and are carried forward to subsequenr periods.
Interest expenses are not operating expenses because interest is normally a financing activity as finance is acquired to run business operating activity is to manufacture product for sale.