Accounts Receivable

Allowance for doubtful account is set up based on past experiance of uncollectibility of account receivable. There are two approach in calculating it. firstly based on net credit sales which calculate how much % of net credit sales in the past became uncollectible. secondly based on Account receivable balance which calculate how much % of AR balnce became uncollectible. the asumption here is what happened in the past wil occure repeatly in the future. normally companies using aging schedule. But it is better to use credit rating of our customer to estimate the uncolletible account.

Two major challenges of a computerized accounting system are data loss and fraud. An increase threat of viruses, hackers stealing data, and power failures are a constant challenge. Creating systems to control who has access to information and accounting data is important to prevent fraud.

The accounting system that reveals the financial position of a business is financial accounting. Financial accounting produces statements called the balance sheet, and profit statement. These two statements allow for further calculations to see how the business is handling cash flows, account receivables, financial leverage, etc.

It depends on many factors.

The demand for the product. when the demand for the product is established. then you make projections for sales.

The Return on investment should be high. its a results of net profit/(current assets + fixed assets). The ROI will be high when the denominator is low. So when you keep current asset level low at the year end. the ROI will be high.

You can keep the current assets level low only when your cash conversion cycle(CCC) is shorter. you can have shorter CCC. only when the Inventory turnover, and Recievables turnover are high and payables turn over is low (or) Inventory turnover, and Recievables turnover are low and payables turn over is high (if you have good credit terms with suppliers).

Over the years it was a bone of contention for many finance manager on how to manage an optimum level.still a lot of work is going on to find out the optimum levels for current assets.

They are found in the current liabilities.

if saving account for more than one fiscal year then it is long term asset otherwise current asset.

Yes, invoice numbers should typically be in ascending order to maintain a clear and organized record-keeping system. This practice helps in tracking and referencing transactions easily, reduces the chances of duplicate invoicing, and ensures compliance with accounting standards. Ascending order also simplifies audits and reconciliations by providing a straightforward chronological sequence.

The main difference is:

An account receivable is an account that is expected to be paid off in one year or less making it a current asset.

A note receivable is generally used for any account that will be paid off in a note form (usually monthly) and is expected to take more than one year (or accounting cycle) to be fully paid making it a long-term asset or "fixed" asset.

(GAAP)

The transaction would increase an asset account and increase a liability account?

what is bill receivable and bill payeble definition with example

in order to receive the discount payment is to be made by the 15th of the following month(depending upon the cutoff date being used) otherwise, payment is to be made in 60 days from the discount date.

Ex. Based on a 25th cut-off

invoice date 9/1 has until 10/15 for discount or 12/15 without discount.

percentage of current assets to total assets

There is no journal entry when equipment rented out to somebody as there will be entry when actual rent received.

Debtors aging analysis is a type of system that organizes and creates reports based on dates and time. It can help keep track of transactions with debtors with all kinds of time measures like due dates, reporting dates, and invoice dates.

The allowance for doubtful accounts is a reduction to the accounts receivable. This is a contra account, similar to accumulated depreciation.

debit Bank 450
credit accounts payable 450

Financial accounting allows business a systemic way to enter financial transactions. The following are some of the characteristics of financial accounting: transactions must be monetary, legal requirement, external use, and historical nature.

Debit cash /bank 1500
Credit Unearned rent 1500

so is it accounts rec of 1500 and credit rent revenue of 1500

or is it 2100 unearned rent and rent revenue 2100

I cannot get this straight

when debit and credit is same an a time

Debit

Hanging folders are never labeled

Drawers follow the same order as your file plan

Folders must have guide cards & disposition control labels for each series

When applicable, labels must have the year written on them

Drawer exteriors must be labeled with enough info

The system of collecting and processing transaction data and disseminating financial information to interested parties is known as the accounting information system. It includes each of the steps in the accounting cycle that you have studied in earlier chapters, the documents that provide evidence of the transactions and events, and the records, trial balances, work sheets, and financial statements that result. An accounting information system may be either manual or electronic.

To have an efficient and effective accounting information system (hereafter referred to simply as the accounting system), certain basic principles must be followed. These principles are:

1. Cost awareness. The system must be cost effective: the benefits obtained from the information disseminated must outweigh the cost of providing it. For example, the value of each accounting report should be at least equal to the cost of producing it.

2. Useful output. To be useful, information must be understandable, relevant,

reliable, timely, and accurate. Designers of accounting systems must consider

the needs and knowledge of various users so that the system's output (reports

and statements) will be useful to them. For example, sales managers

may need weekly reports of sales, and factory supervisors may need daily reports of production. Others with differing responsibilities (such as vice-presidents) may need such reports only monthly or quarterly.

3. Flexibility. The accounting system should be able to accommodate a variety

of users and changing information needs. The business environment changes

as a result of technological advances, organizational growth, increased competition,

government regulation, or changes in accounting principles, when

it does, the accounting system should be sufficiently flexible to meet the

resulting changes in the demands made upon it.

If the accounting system is cost effective, provides useful output, and has the

flexibility to meet future needs, it can provide a valuable service and make a

major contribution to both individual and organizational goals.