Chapter 4 - Cash and Receivables Flashcards
(26 cards)
Deposits in Transit
Add in Bank Balance
Outstanding Cheques
Subtract in Bank Balance
Bank Errors
Add or Subtract in Bank Balance
Bank Collection
Add in Book Balance
Interest Revenue
Add in Book Balance
ETF Receipts
Add in Book Balance
Services Charges
Subtract in Book Balance
NSF Cheques
Subtract in Book Balance
EFT Payments
Subtract in Book Balance
Book Errors
Subtract or Add in Book Balance
Separate Account in General Ledger for Each Customer
Subsidiary Ledger
Most Used Method to Estimate Uncollectibles - Balance Sheet Approach
Aging-of-receivables
Record an Allowance for Uncollectibles Accounts
DR Debt Expenses
CR Allowance for Uncollectible Accounts
Record a Write-off for Uncollectible Accounts
DR Allowance for Uncollectible Accounts
CR Accounts Receivable
(the opposite when you receive the money unexpected)
Promissory Note - Creditor
Lender
Promissory Note - Debtor
Maker, borrower
Promissory Note - Principal
Amount borrowed by debtor
Promissory Note - Term
Length of Time the Debtor has to repay the Note
Record a payment of a Promissory Note
DR Cash
CR Notes Receivable (Principal)
CR Interest Receivable
CR Interest Revenue (the remaining int. revenue)
Record a Purchase in Credit Card
DR Cash
DR Credit Card Fee
CR Sales Revenue
Record a Purchase in Debit Card + Cashback
DR Cash
DR Interac-Fee
CR Sales Revenue
CR Cash (to cardholder)
Selling Factoring Receivables
DR Cash
DR Finance Expense
CR Accounts Receivable
A company sells receivable to a factor, which pays a discounted price. The company receives immediate cash.
Current Ratio
Total Current Assets / Total Current Liabilities
Acid-Test (or Quick) ratio
Cash+Short-Term Investments+Net Current Receivables / Total Current Liabilities
The Higher, easier to pay current liabilities.
At least 1.0 to be safe, must be not too high. Because Cash does not earn a lot of return.
