Cost Management
What information is conveyed about receivables?
USD 15.00
Learning Objectives:
- Understand that accounts receivable are reported at net realizable value.
- Know that net realizable value is an estimation of the amount of cash to be collected from a particular asset.
- Appreciate the challenge that uncertainty poses in the reporting of accounts receivable.
- List the factors to be considered by company officials when estimating the net realizable value of accounts receivable.
- Understand the reason for reporting a separate allowance account in connection with accounts receivable.
- Know that bad debt expenses must be anticipated and recorded in the same period as the related sales revenue to conform to the matching principle.
- Prepare the adjusting entry necessary to reduce accounts receivable to net realizable value and recognize the resulting bad debt expense.
- Record the impact of discovering that a specific receivable is uncollectible.
- Understand the reason that an expense is not recognized when a receivable is deemed to be uncollectible.
- Record the collection of a receivable that has previously been written off as uncollectible.
- Recognize that estimated figures often prove to be erroneous but changes in previous year figures are not made if a reasonable estimate was made.
- Estimate and record bad debts when the percentage of sales method is applied.
- Estimate and record bad debts when the percentage of receivables method is applied.
- Explain the reason that bad debt expense and the allowance for doubtful accounts will normally report different figures.
- Understand the purpose and maintenance of a subsidiary ledger.
- Recognize that transactions denominated in a foreign currency are now quite common.
- Understand the necessity of remeasuring foreign currency balances into a company’s functional currency prior to the preparation of financial statements.
- Appreciate the problem that fluctuations in exchange rates cause when foreign currency balances are reported in a set of financial statements.
- Know which foreign currency balances are reported using a historical exchange rate and which balances are reported using the exchange rate in effect on the date of the balance sheet.
- Understand that gains and losses are reported on a company’s income statement when certain foreign currency balances are remeasured using new currency exchange rates.
- Compute the current ratio, the amount of working capital, and other amounts pertinent to the reporting of accounts receivable.
- Describe the meaning of the current ratio.
- Describe the meaning of the working capital balance.
- Calculate the amount of time that passes before the average accounts receivable is collected and explain the importance of this information.
- List techniques that an organization can implement to speed up the collection of accounts receivable.
Other course details:
- This is an introductory course that does not require any prerequisite.
- This course can be taken on a standalone basis.
- This course is chapter 7 in the book titled "Financial Accounting".
- It provides 3 PDUs towards your PMP professional development education.
Course Features
Credits:
3 PDU
Skill Section:
Technical
Access:
Lifetime
Test Questions:
20