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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.
2,500 Questions
Is short-term debt the same as current liabilities?
Essentially, yes.
Many times a company has Long-term debt, with a certain amount to be repaid within the year. On the company's balance sheet they will have the remaining amount of their Long-term debtincluded in Non-Current Liabilities, while in Current liabilities they will have the Current portion of long-term debt.
Basically, the balance sheet has a section for Current liabilities, which would include accounts with debts to be repaid in the short-term (generally within the year). Normally it is not listed as Short-term debt, but rather an account like Accounts payable or Bank loan, or as I stated earlier, Current portion of long-term debt.
Is accounts payables a part of an asset or a liability?
When company purchases supplies from vendors they are require to pay them at the same time but instead of paying them out immediately they got the time to pay in future so it is the liability of the company to pay them that;s why accounts payable is liability and not the asset.
Why is accounts payable aging report needed for an audit?
I think you mean an aged Accounts RECEIVABLE report.
If you are familiar with auditing, the auditor needs to perform a risk assessment and satisfy certain assertions with regard to accounts. One assertion for Accounts Receivable (A/R) is Valuation & Allocation, which basically asks the question, "Is the account valued correctly?"
The auditor must perform tests and gather audit evidence to satisfy this assertion, one procedure includes examining a company's aged A/R report, which list the company's customers that owe money to the company. The report states which balances have been owing for different lengths of time, and normally an estimate is made to determine what values of A/R is uncollectible.
If the company has not made an appropriate adjustment to account for these uncollectible amounts, normally the auditor will suggest that an entry is made to do so, or else the account is not valued correctly. If management refuses the entry, the auditor would have to decide how their audit opinion would be affected.
What is the usual method for aging account?
The usual method for aging accounts is to list them according to the day payments are due. A chart is helpful to determine the amount owed at any given time. If the terms of the invoice are to pay within 30 days, then each 30 days out, the business would show what that customer owed at that time if only partial payments were made.
Is salaries payable a long term liability?
No, Its not a long term liability, since it will be paid in the same month the expenes is booked or the next month
Where does accounts receivables go on an income statement?
Account receivables only appear on Balance Sheet.
Do Debits increase assets and increase liabilities?
Debiting an asset account does increase that account, however debiting a liability account decreases the liability.
Remember the double entry accounting equation... Assets = Liabilities + Owners Equity (Stockholders Equity)
In double entry accounting as I've stated in many other answers, "for every action there must be an equal and opposite reaction". In other words for ever Debit there must be an equal credit.
Since Assets INCREASE with a debit, it stands to reason that Liabilities "MUST" decrease with a Debit. Since opposite sides of the equation can not have the same affect. You can not debit an asset and a liability in the same transaction for the exact amount. For example, say you purchase equipment on credit. Your Assets are going to increase, but so is liabilities, because you now "owe" a debt. Assets increase with a debit, you can't have a second debit for the "same" amount in the single transaction, for every debit there is an equal credit (always).
Therefore equipment purchase on credit for $500 will increase your asset of equipment (debit) $500 and increase your liability account payable (credit) $500.
What is the journal entry to record an invoice prior to cash received and revenues recognized?
Generally as most businesses sell goods and services on credit terms, the value of the sales invoice is debited into the customers account as a debtor and a corresponding credit entry passed to sales.
Eventually when proceeds from the sales are received in the form of cash/ bank transfer, the debtor's account is credit to cancel the initial debit for the sale and cash ledger debited with the receipt.
depository box
Is common shares considered as a current liability?
Outstanding stock is an "owner's equity" account. It's on the same side of the accounting equation as liabilities, but it is not a liability.
Is current account asset or liability to the bank?
yes it is and thanks for asking because i was just talking about that last week
How are a schedule of accounts payable prepared?
An accounts payable is a "Liability" account. Payable being the "key" word, meaning something you have to "Pay" or "Owe".
ALL payable accounts are liabilities no matter what they are for. Whether it is a bill payable, mortgage payable, note payable, wages payable, etc, they are all listed as a liability.Rahul
What's the relationship between current liabilities and current assets?
Solvency. A company is considered solvent if it's current assets exceed it's current liabilities. A company is considered to be insolvent if their current liabilities exceed their current assets.
Sundry Debtors
What is the journal entry for purchase on credit and sales on cash?
Debit: Purchases
Credit: Accounts Payable
Debit: Cash
Credit: Sales
Is suspense account is a nominal account?
Nominal accounts are closed at the end of each accounting year. In that sense, surely Suspense Account is a Nominal Account.
Why is it important to distinguish current and long term liabilities?
The timing of those liabilities.
Current liabilities are due within one year while long term liabilities are due after one year.
But if you have a bank loan over 4 years, you are to split the loan into the amount due within one year and put that in current liabilities with the remaining amount put in long term liabilities.
