Pearson Pic

Pearson Pic Study

a. Accounts due is money owed by customers (individuals or corporations) to an a nonher(prenominal)(prenominal) entity in exchange for unpaid goods or proceedss. Receivables come in the form of operating lines of credit and are commonly collectible in a short period of time (days to a year). (2)Trade credit, open narration terms, trade receivables, and royalty advancements are other terms used to describe accounts receivable.
b. Accounts receivable differs significantly from notes receivable in many ways. Accounts receivable generally do not accrue interest. Accounts receivable is considered a short term debt that is ordinarily paid within 12 months and occurs after receiving a service or product. Notes receivable is an extended line of credit and is usually owed for a period chronic than a year and typically accrues interest.
c. A contra account is a subaccount with the opposite normal sleep. For congressman accumulated depreciation-equipment (asset with a credit normal balance). (2) Sales returns and braggy debts are contra accounts of Pearson trade. (3) Managers can predict the balance of each account by using the percentage of sales rule. This rule determines the judge bad debt loss by applying the percentage to the sale to the stolid of the current period.



Once management estimates the percent they will cipher the difference between required balance and the current balance in the allowance account.
d. This alternative computes doubtful accounts expense by anticipating the percentage of sales (or credit sales) that will eventually lose it to be collected. The percentage of sales method is sometimes referred to as an income statement approach because the only number being estimated (bad debt expense) appears on the income statement. Aging of Accounts Receivable-is a method similar to Percentage of final result Accounts Receivable, but it is a more precise variation. Aging considers that the longer a receivable is outstanding, the less likely it is to be collected. A...If you compulsion to get a full essay, order it on our website: Orderessay



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