Accounting for Receivables and Payables

These flashcards cover key terms and concepts related to accounting for receivables and payables, including definitions, processes, and effects on financial statements.

Receivables

Assets generated through transactions, representing amounts owed to a company by customers.

Payables

Liabilities incurred by a company, representing amounts owed to suppliers for goods or services received.

Control Accounts

Accounts in the General Ledger used to simplify the accounting process and maintain overall control.

Subsidiary Ledger

Detailed accounts that provide individual records for customers and suppliers, used to manage and control credit risk.

General Ledger

A complete record of all financial transactions over the life of a company.

Trade Receivables

Current Assets generated from the main business activities of selling goods or services on credit.

Trade Payables

Current Liabilities arising from the purchase of goods or services in the normal course of business on credit.

Aging Report

A report that categorizes receivables based on how long an invoice has been outstanding.

Credit Risk Management

The process of identifying, assessing, and controlling credit risk to reduce the likelihood of defaults.

Impairment Loss

A reduction in the recoverable amount of a financial asset below its carrying amount.

Write-off

The formal accounting action to remove an uncollectible account from the balance sheet.

Collection Action Matrix

A structured approach for prioritizing and executing collection actions based on the age of the accounts receivable.