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4.3 Accounts Receivable
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8Leabharlann 4.3 Accounts Receivable
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4.3 Accounts Receivable
Definition:
▲ Credit sales on open account increase Account Receivable. Accounts Receivable arise when a business sells goods and services on credit. Sales and profits can be increased by granting customers the privilege of making payment a month after the date of sale
(5) goods returned from customers (or amounts claimed)-sales returns and allowances
(6) adjustments to other item
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4.3 Accounts Receivable
Example: Assume the following transactions occurred in the month of July for Swanson’ Motor Repairs: July 1 sold motor parts on credit to Wilson $3,000.July 3 Wilson returned unused parts to the value of $45.At end of the month Swanson collected the amount of credit sales. The related journal entry as follows:
July 1 Dr. Account Receivable 3,000
Cr. Sales Revenue
3,000
Sale on account
July 3 Dr. Sales Returns and Allowances 45
Cr. Account Receivable
45
Sales return for unused parts
Related Process of Cash Transaction:
(1) Cash recording
(2) Cash depositing
(3) Reconciliation
(4) Refunds and voids
(5) Safeguarding cash
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4.2 The Bank Account: a Control Device
Unit 4 Cash and Receivables
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葛军 吴晓华
高等教育出版社
2 Outline of Unit 4
4.1 Cash 4.2 The Bank Account: a Control Device 4.3 Accounts Receivable 4.4 Notes Receivable 4.5 Accounting for Bad Debts
Related process of Bank Account:
(1) goods sold on credit
(2) services performed on credit
(3) other revenues e.g. commissions
(4) the collection of Accounts Receivable
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3 List of Cash and Receivables
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4.1 Cash
Definition:
▲ The term ‘cash’ includes currency, coins, checks, money orders and credit card receipts. Individual accountability for all cash, including cash receipts, change funds and petty cash funds, should be maintained at all times. An accounting record for cash should be established immediately upon receipt. Access to cash should be restricted at all times to the person accountable for the funds
Related process of Bank Account:
(1) Bank Statement
(2) Bank Reconciliation
(3) Recording Entries from the Reconciliation
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4.2 The Bank Account: a Control Device
Definition:
▲ Keeping cash in a bank account is part of internal control because banks have established practices for safe guarding cash. Banks also provide depositors with detailed records of cash transactions. To take full advantage of these control features, the business should deposit all cash receipts in the bank account and make all cash payments through it.