Accounts Receivable

On Your Test

You will be expected to know the following for multiple choice concept questions. Almost all questions will relate to these things:

When is revenue recognized – earned and believe it will be collected

How much cash will be collected when a customer pays and takes a discount
How the “sales discount” account is reported

How accounts receivable is reported on the balance sheet and what it means

How the 4 major transactions related to accounts receivable are recorded
Which accounts are increased/decreased with a particular transaction

When is bad debt expense recorded

Estimating bad debt expense using either of two methods:

% of sales method
% of accounts receivable (or aging) method

What is the difference in the two methods used to estimate bad debt expense

You will be asked to do the following on problems and multiple-choice problems that require calculations. It boils down to this:

Prepare journal entries (record) the 4 major transactions related to A/R

Determine bad debt expense using:

1) % sales
2) % A/R (or aging)

Determine cash collections
Determine write-offs

Determine the ending balance of accounts receivable and the allowance acct.
Show how accounts receivable will be reported on the balance sheet

Compute the amount of the sales discount taken