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Accounts Receivable

Accounts receivable represents the money owed by clients to an establishment for the sale of products and services, which must be paid within an agreed timeframe. It is commonly executed by generating an invoice and delivering it to the customer.

4,566 Questions

Is account payable an inflow or outflow or neither?

The recording of an account payable does not create any current effect on cash flow, so it is neither creates an inflow or outflow.

What do you mean by process costing?

The production is continuous. The product is homogeneous. The process is standardized. The output of one process becomes the raw material of another process. The output of the last process is transferred to finished stock.

How do you journalize a sales tax payable?

Since you are using a "payable" account we do "not" touch cash until the actual payment is made. We however still know we need a debit and a credit for this transcation. To put this in our journal we will

Debit Sales Tax Expense (check your company for exact account name)

Credit Sales Tax Payable (again check your company for account name)

Once you pay your taxes then you have to adjust these entries to reflect payment. In order to do that, we again use two accounts, this time however we do not touch Sales Tax Expense, it must stay there until we close our out books, we do however have to show that the payable has now become paid and that we no longer have that amount of cash on hand. This transaction will be adjusted in the journal as

Debit Sales Tax Payable (to zero out this account or adjust it accordingly)

Credit Cash (to show we no longer have that amount of cash on hand)

Is temporary overdraft a current liability?

Yes. An overdraft simply means that the bank has paid an item that was presented against your bank account and represents, essentially, a short term loan from the bank to you. Like any other short term obligation, it is a current liability.

What does it mean to advance the payment due?

To put it simply, it is a way of telling you to pay them the money you owe.

What are the 4 functions of accounting?

Functions of accounting are

  1. Analysis of financial transactions occurred in an enterprise for a given period.

  2. Segregation of transactions by identifying revenue transactions and capital transactions .

  3. identifying accounts to be opened for each financial transaction & recording in journal & ledger.

  4. Preparing trial balance to verify errors to correct & correction. Preparing final accounts at the end of period to measure of outcome of business to arrive at profit /loss .Analysing reasons for loss if any by financial statement analysis

If the assets of a business are 107K and the owner's equity is 75K does the owner's investment equal 182K?

In pure accounting terms Assets - Liabilities = Owner's equity. That means that if you have 107k of assets and 75k of OE, you have 32K of liabilities.

Good accounting answer...in general terms, count up what you own (Assets), subtract what you owe(liabilities) and that is what you are worth (equity), so if you own 107K and are worth 75K, then you owe 32K.

I agree with the above, and the basics of Accounting provided.

But it addresses what the owners equity is -- that is the amount of value on the companies books after all claims are made/paid.

The question asks what is the owners investment equal to. That is almost always different than owners equity. The owners investment is viewed from the owners side bookkeeping, not the business side. It is entirely possible to buy stock in a company for say $100...that is the owners investment....it doesn't change based on anything to do with the books or operations of the company - since he isn't investing more (or taking anything out - barring dividends and such for the moment).

Say then the company has good (or bad) fortunes (or the stock market and investment marketplace changes)...and he sells his investment for a different amount...the difference is the gain or loss on the owners investment.

The owners equity portion of the business books could have gone up, down (or stayed the same). Same holds true if it was 100% of the biz instead of just some portion of stock in it.

So in the question above, we don't know what the owners investment is, nor can we determine it from the companys books and records.

What is an effective system for managing accounts payable and receivable and a monthly operating budget?

AnswerI use MYOB booking system. (Mind your own business.) It can be purchased online or any good computer store.

Another good accounting software system is quickbooks or Peachtree. These are the two accounting software packages that most businesses uses.

When confirming accounts payable emphasis should be put on what kind of accounts?

Vendors that the company has made a large number of purchases from (in terms of dollar value). The account balance does not matter.

Why is Cost accounting a subset of management accounting?

The main purpose of cost accounting is to provide management with financial information necessary to make business decisions. Cost accounting focuses mainly around cost variances, budget analysis, etc.

Financial accounting on the other hand ensures that information being reported to outside investors/users is accurate and in compliance with a given financial reporting framework.

Hope this helps...

What does 30 days net monthly mean?

It's a payment term meaning: payment due 30 days from the end of the month in which the invoice is raised

What does terms net 10 eom means?

EOM stands for "end of month".

Net 10 EOM means that the net amount of the account is due 10 days after the end of the month which the sale was made.

Eg. Customer buys $25,134 worth of merchandise from your store on 14th July.

N10 EOM credit terms means that this account must be paid by the 10th June.

Hope that helps

Edit: I believe in the example that the original poster meant 10th August as the pay date as 10th June would be roughly 11 months after purchase.

What is the difference between cost accounting management accounting and financial accounting?

S.No.

Basis

Cost Accounting

Financial Accounting

1.

Scope

It is suitable only for such business concerns which are engaged in manufacturing, production, mining or providing some service (e.g. bus company electric supply company etc.)

It is suitable for all businesses - manufacturing, production or even in marketing only.

2.

Pre-determined and historical accounting

In cost accounting, the expenditure to be incurred is estimated and standard cost of product is found. Thus, it act as a pre-determined process.

In Financial accounting, accounting is done after the expenditure has already been incurred and not prior to that. So it is historical accounting.

3.

Nature of transactions

Transactions related with production activities only are accounted for in this method. Donations, dividend received, etc. are not taken into account as these are not related with production.

All economic transactions are taken into account, whether these are related with production or not.

4.

Selling price

By cost accounting the price of the product can be fixed more accurately in a scientific manner.

In the absence of information about cost, the selling price fixed by this method may be misleading.

5.

Profit & Loss

Profit calculated by this method expresses the result of production activities.

Profit calculated by this method expresses the profit of the organization.

6.

Information about cost

Full and correct information about the cost, per unit cost, various elements of cost, etc. of the product is made available in cost accounting.

Financial accounting does not give such detailed and correct information.

__________ Abhishek Karagwal, Chairman Stallions Pvt. Ltd

Contact me at : abhi541@hotmail.com

ph: 07737816441

Is short term debt the same as current liabilities?

Current liabilities are liabilities that are due within 12 months. Short term debt is a current liability. However, there are other current liabilities. For example, taxes payable, interest payable, wages payable, accounts payable.

Therefore, short term debt is not the same as current liabilities.

(Short term debt is a current liability, but not all current liabilities are short term debt.)

Is stationery a liability?

From a bookkeeping point of view Stationary is a separate account from everything else and when posted is usually classed as an Asset ot a Liability.

Disadvantages of computerized accounting?

Often times people will assume the computer is doing things correctly and problems will go un-checked for long periods of time. Also computers need electricity, are prone to viruses, are delicate and expensive. Given these drawbacks most people in modern countries feel the benefits far outweigh the negatives.

How do you lower average collection period?

Start by determining your days average collection ratio. If the ratio is >14 days past your net terms the process you are currently using is broken.

Establish your weighted credit extension policy. What $ amount you will extend to each customer. Use past history to establish this value and build quantifiable criteria based on you financial statements. Once the weighted process is defined establish the process that will be followed from the (buy) date until the net term date.

Establish this collection policy in writing (very important) now pass along the accountability to a staff personnel that can be quantifiably measured to your newly defined policy. Full benchmarks and accountability should be give to that staff personnel, because that will be a criteria for the individual to cover his/her labor burden and provide profitable value for their results to your bottom line.

What type of asset account is prepaid rent?

Prepaid Rent is a Current-Asset account. Since it deals with "prepaid" it will expire on a regular basis and is not a "fixed" asset. Each month (or whatever terms the rent may be paid) the amount is removed from Prepaid-Rent and placed in Rent Expense.

What is the consequence to the debtor if you are an unnamed creditor in a Chapter 7 and should be?

Any creditor not included in a bankruptcy discharge retains the right to continue attempting to collect a debt. That would include using legal remedy in the form of a lawsuit against the debtor.

What are the advantages of internal capital reduction?

Reduction in share capital can enable one or more of the following: (i) write off accumulated losses on profit and loss account, so that dividends can be paid much earlier. (ii) its balance sheet can reflect more accurately the capital employed in the business, where capital has been lost, and (iii) repay to shareholders part of its paid-up capital in case the capital is not needed in the future.