Chapter 4

Receivables

Represents the money owed to a company by its customers or other entities for goods or services already delivered or provided. These are considered assets on the company's balance sheet.

Accounts Receivable

The most common type of receivable, representing money owed for goods or services sold on credit with standard payment terms.

Notes Receivable

A written promise from a customer or borrower to repay a specific amount of money at a future date, often with interest.

Loans Receivable

Money lent out by a company to customers, employees, or other entities, typically with interest.

Advances

Prepayments made to suppliers or customers for goods or services to be delivered or received in the future.

Accrued Income

Revenue earned by a company but not yet received in cash. It's recorded when earned, even if payment is pending.

Deposits

Money held by a company for a specific purpose, such as a security deposit or a customer's advance payment.

Claims Receivable

Money owed to a company as a result of a legal claim or insurance claim.

Non

Trade Receivable

Trade Receivable

Receivables arising from the company's core business operations, such as sales of goods or services.

Normal Operating Cycle

The time it takes for a company to convert its inventory into cash from sales. It involves purchasing inventory, selling it on credit, and collecting payments.

Financial Institutions

Banks, credit unions, and other organizations that provide financial services, including lending, deposit

Adjusting Journal Entry

An accounting entry made at the end of an accounting period to update accounts and ensure they reflect the correct balances.

Advances from Customers

Prepayments made by customers for goods or services to be delivered or provided in the future.

Advances to Suppliers

Prepayments made by a company to suppliers for goods or services to be delivered or provided in the future.

Scanning

The process of electronically capturing data from documents, such as invoices or purchase orders, to streamline accounting processes.

Dividends Receivable

Money owed to a company as a result of its ownership of shares in another company that has declared dividends.

Freight on Board (FOB) Shipping Point

The buyer is responsible for the cost of shipping goods from the seller's location.

Fair Value Plus Transaction Costs

A method of valuing an asset based on its market value plus any costs incurred in acquiring or selling it.

Transaction Price

The amount of money a company expects to receive from a customer for a sale.

FOB Destination

The seller is responsible for the cost of shipping goods to the buyer's location.

Freight Prepaid

The seller pays for the cost of shipping goods.

Freight Collect

The buyer pays for the cost of shipping goods.

Freight

In

Freight

Out

Reimbursement Receivable

Money owed to a company for expenses it has paid on behalf of another entity.

Trade Discounts

Reductions in the list price of goods or services offered to customers based on their volume of purchases or other factors.

List Price

The original or advertised price of a good or service.

Invoice Price

The final price of a good or service after any discounts or adjustments have been applied.

Cash Discounts

Reductions in the invoice price offered to customers for making prompt payment.

PFRS 15

International Financial Reporting Standard 15, which provides guidance on revenue recognition for companies.

Net Method

A method of accounting for sales discounts where the discounted amount is recorded as revenue.

Gross Method

A method of accounting for sales discounts where the full invoice amount is recorded as revenue, and the discount is recorded as an expense if taken by the customer.

Recoverable Historical Cost (Net Realizable Value)

The amount of money a company expects to recover from a receivable, taking into account any potential losses.

Sales Discount

A reduction in the invoice price offered to customers for making prompt payment.

Allowance for Doubtful Accounts

An account used to estimate the amount of receivables that may not be collected.

Allowance Method

A method of accounting for uncollectible receivables where an allowance for doubtful accounts is created and adjusted periodically.

Write Off

The process of removing a receivable from the books when it is deemed uncollectible.

Direct Method

A method of accounting for uncollectible receivables where individual receivables are written off when they are deemed uncollectible.

Percentage of Net Credit Sales Method

A method of estimating uncollectible receivables based on a percentage of the company's net credit sales.

Percentage of Receivable Method

A method of estimating uncollectible receivables based on a percentage of the outstanding receivables balance.

Single Loss

Rate Method

Aging of Receivables

A process of analyzing receivables based on their age to estimate the likelihood of collection.

Function of Expense

The category of expense to which a particular cost is assigned, such as selling, general, or administrative expenses.

Administrative Expense

Costs incurred in managing the day

Receivables Denominated in Foreign Currency

Receivables owed in a currency other than the company's functional currency.

Off

Balance

Risk of Accounting Loss

The risk that a company may experience a loss due to errors or misstatements in its accounting records.