Chapter-V Accounts Receivable Management • Introduction • Goals of Receivable Management • Credit Management • Optimum Credit Policy • Credit of Account Receivable 155 Introduction Accounts receivable represent the amount due form customers (book debts) or debtors as a result of selling goods on credit. “The term debtors is defined as ‘debt’ owned to the firm by customers arising from sale of goods or services in the ordinary course of business.” The three characteristics of
Premium Credit rating Accounts receivable Balance sheet
AN EVALUATION OF ACCOUNTS RECEIVABLE MANAGEMENT BY MANUFACTURING FIRMS IN NAKURU MUNICIPALITY [pic] RESEARCH PROJECT SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE AWARD OF THE DEGREE IN BACHELOR OF COMMERCE (ACCOUNTING OPTION) SCHOOL OF BUSINESS KABARAK UNIVERSITY APRIL 2008 DECLARATION This research project is our original work and has not been presented for the award of any diploma or degree in any other university or college or any other institution of higher learning. Signature______________________________
Premium Accounts receivable Balance sheet
Accounts Receivable Turnover = Net Sales/Average Net Account Receivables Accounts receivable turnover ratio measures the effectiveness of a company in extending credit and collecting debts. It is an activity ratio that measures how efficiently a firm uses its assets. Year ABC DEF GHI Industry Average 2012 31‚ 053/988 = 31.43 16‚842/1‚282.5 = 13.13 5‚160/618 = 8.35 17.64 2013 32‚722/1‚042 = 31.4 18‚657/937 = 19.91 5‚858/494 = 11.86 21.06 In this table you see the accounts receivable turnovers from
Premium Accounts receivable
Accounts Receivable Management Accounts receivable are amounts owed by customers on account. They result from the sale of goods and services. They are generally expected to be collected within thirty to sixty days and are the most significant type of claim held by a company. There are two costs associated with extending credit to customers: 1. The cost of the selling company not being able to deposit the monetary value of a completed sale in its bank that is‚ as a result of not collecting cash
Premium Accounts receivable
Goals of Receivable Management The basic goal of credit management is to maximize the value of the firm by achieving a trade off between the liquidity (risk and profitability). The purpose of credit management is not to maximize sales‚ nor to minimize the risk of bad debt. If the objective were to maximize sales‚ then the firm would sell on credit to all. On the contrary‚ if minimization of bad debt risk were the aim‚ then the firm would not sell on credit to anyone. In fact‚ the firm should manage
Premium Finance Investment Interest
audit tests on Bradmark’s Revenue and Expenditure Cycles. The audit tests were performed through the ACL Program. 2005 Rachelle Cultura | Trixia Ebol | Christine Fonseca Mary Rose Samas | Nadaine Tongco Ross & Specter Co. October 24‚ 2012 1 | P a g e REVENUE CYLCE Assessment of Internal Controls over the Revenue Cycle The assessment of Bradmark’s internal controls over its revenue cycle procedures were done through the analysis of the processes each department is undertaking.
Premium Accounts receivable Invoice
True / False Questions 1. Credit sales transfer products and services to a customer today while bearing the risk of collecting payment from that customer in the future. True False 2. At the time of a credit sale‚ a company would record an increase in assets and an increase in revenues. True False 3. A sale on account is recorded as a debit to revenue and a credit to accounts receivable. True False 4. Accounts receivable represent the amount of cash owed to the company by its customers
Premium Accounts receivable
CHAPTER 9 ACCOUNTING FOR RECEIVABLES SUMMARY OF QUESTIONS BY STUDY OBJECTIVES AND BLOOM’S TAXONOMY Item SO BT Item SO BT Item SO BT Item SO BT 5 5 5 5 9 9 1 3 K AP K K K K K K 113. 114. 115. 116. 117. 118. 119. 120. 121. 122. 123. 124. 125. 126. 127. 128. 129. 130. 131. 132. 133. 134. 135. 136. 137. 4 4 5 5 5 5 5 5 5 5 5 5 5 5 5 5 6 6 6 6 6 6 7 7 8 K K K AP AP AP AP K K K C
Premium Accounts receivable Balance sheet
Question 1 For each of the following independent situations‚ compute net accounts receivable. a. Accounts Receivable has a balance of $14‚000. The Allowance for Uncollectible Accounts has a credit balance prior to adjustment of $300. An aging schedule prepared on December 31 reveals $1‚100 of uncollectible accounts. b. Accounts Receivable has a balance of $25‚700. The Allowance for Uncollectible Accounts has a debit balance prior to adjustment of $400. An aging schedule
Premium Accounts receivable Generally Accepted Accounting Principles Balance sheet
AP-3: ⇒Audit Program for Accounts Receivable Company Balance Sheet Date | | | The company has the following general ledger accounts that are classified in the accounts‚ notes‚ or other receivables captions of the | |balance sheet:
Premium Accounts receivable Invoice Audit