Principles of Accounting 1 chapter 9 notes
Accounts Receivable:
an amount due from another party two of the most common are: Accounts Receivable &Notes Receivable others are: interest receivable, rent receivable, tax refund receivable, and receivables from employees
Accounts Receivable- are amounts due from customers for credit sales when a company does extend credit directly to customers it:
1. Maintains a separate account receivable for each customer
2. accounts for bad debts from credit sales
Recognizing Accounts Receivable:
AR occurs from credit sales to customers
Sales on Credit: credit sales are recorded by increasing(debiting) accounts receivable a company must maintain a separate account for each customer that tracks how much that customer purchases, pays, and owes this info is used to send bills to customers and for other business analyses companies that extend credit directly to their customers keep a separate account receivable for each one of them the general ledger continues to have single AR accounts along w/ other financial statement accounts
Accounts Receivable Ledger- a supplementary record that is created to maintain a separate account for each customer
Schedule of Accounts Receivable- the balance of the AR account in the general ledger equals the total of its balances in the ARC if a customer owes interest on a bill, we debit interest receivable and credit interest revenue for that amount
Credit Card Sales: many companies allow their customers to use third party credit and debit cards gives customers the ability to make purchases without cash or checks once credit is established with a company or bank, customers don’t have to open accounts w/ every store these cards allow customers to make single monthly payments instead of several payments to different creditors nd can defer payments sellers allow customers to use cards instead of granting credit immediately b/c
1. seller doesn’t have to evaluate each customer's credit standing or make decisions
an amount due from another party two of the most common are: Accounts Receivable &Notes Receivable others are: interest receivable, rent receivable, tax refund receivable, and receivables from employees
Accounts Receivable- are amounts due from customers for credit sales when a company does extend credit directly to customers it:
1. Maintains a separate account receivable for each customer
2. accounts for bad debts from credit sales
Recognizing Accounts Receivable:
AR occurs from credit sales to customers
Sales on Credit: credit sales are recorded by increasing(debiting) accounts receivable a company must maintain a separate account for each customer that tracks how much that customer purchases, pays, and owes this info is used to send bills to customers and for other business analyses companies that extend credit directly to their customers keep a separate account receivable for each one of them the general ledger continues to have single AR accounts along w/ other financial statement accounts
Accounts Receivable Ledger- a supplementary record that is created to maintain a separate account for each customer
Schedule of Accounts Receivable- the balance of the AR account in the general ledger equals the total of its balances in the ARC if a customer owes interest on a bill, we debit interest receivable and credit interest revenue for that amount
Credit Card Sales: many companies allow their customers to use third party credit and debit cards gives customers the ability to make purchases without cash or checks once credit is established with a company or bank, customers don’t have to open accounts w/ every store these cards allow customers to make single monthly payments instead of several payments to different creditors nd can defer payments sellers allow customers to use cards instead of granting credit immediately b/c
1. seller doesn’t have to evaluate each customer's credit standing or make decisions