Accounts Receivable

Internal Controls are:

• the ways employees are trained to not get angry with each other
• the ways managers are taught not to get angry with employees
• procedures put in place by a business to safeguard its assets

A business may choose to offer credit to customers to:

• increase sales and keep up with competitors
• show customers how double entry accounting is used
• reduce the risk of not getting paid by customers

Accounts Receivable is an account that records:

• all cash sales to customers
• all sales to customers on credit
• Both A and B

Offering credit to customers means:

• they can buy now and pay later
• they can buy using a credit card such as Visa
• they pay for the goods immediately

A business should give credit to customers if:

• they look like nice people
• they can demonstrate the ability to pay with documented evidence
• they are friends of an employee

The Provision for Doubtful Debts account is a:

• negative asset that shows the amount of Accounts Receivable that may not be collected
• an expense account showing debts that will never be paid
• an account recorded in the liability section of the Statement of Financial Position

Accounts Receivable and Accounts Payable are referred to as subsidiary ledgers because:

• they are less important than other accounts
• they are accounts that show the totals of the individual accounts of those we owe money to and those who owe us monety
• James Subsidiary first recorded them in his records

Accounts Payable is an account that records:

• all cash purchases from suppliers
• all credit sales to customers
• all credit purchases from suppliers

Cowan Ltd sells $352 of stock to K Jensen on credit. The correct GJ entry is:

• DR Accounts Payable - K Jensen 352 CR GST Clearing 32 CR Sales 320
• DR Accounts Receivable - K Jensen 352 CR GST Clearing 32 CR Sales 320
• DR Accounts Receivable - K Jensen 352 CR Sales 352

On the 30 June Sophie Ltd estimates that $1095 of its Accounts Receivable accounts may not be collected. The correct GJ entry is:

• DR Accounts Receivable 1095 CR Doubtful Debts Expense 1095
• DR Provision for Doubtful Debts 1095 CR Accounts Receivable 1095
• DR Doubtful Debts Expense 1095 CR Provision for Doubtful Debts