Discussion
Home ‣ Interview ‣ Accounting and Finance Comments
- Question
What is an accrued receivable?
- Correct Answer
- An accrued receivable is either a trade receivable or a non trade receivable for which a business has earned revenue, but for which it has not yet issued an invoice to the customer You normally create an accrued receivable in either of the following scenarios: * Milestone A milestone has been reached in a contract with a customer, where you are clearly entitled to a specific, pre-defined amount, but the contract does not yet allow you to issue an invoice; or * Services The contract with the customer states that the customer will pay you for hours worked, rather than for a specific work product For example, there may be 10 hours of work that will eventually be billed at a rate of $80 per hour, so you accrue the receivable for $800 The journal entry to create an accrued receivable is a debit to an accounts receivable account, and a credit to the revenue account It may be useful to create a unique general ledger account for accrued receivables, rather than using the main trade receivables account, in order to clearly show these transactions In addition, you should set these journal entries to automatically reverse themselves in the next accounting period; you would then replace the accrual in the next period with the actual invoice (assuming that there is a billing event in the next period) If you are unable to create an invoice in the next period, then you should continue to accrue and reverse the revenue and accrued receivable in every period on a cumulative basis until you can eventually issue an invoice For example, ABC International has completed a milestone in a project to install a dam, though it is not allowed under the contract to issue an invoice more frequently than once a quarter It therefore accrues revenue and a receivable of $50,000 at the end of January The journal entry automatically reverses at the beginning of February ABC then earns another $30,000 on the next project milestone in February, but is still contractually unable to issue an invoice It therefore accrues revenue and a receivable of $80,000 in February The journal entry automatically reverses at the beginning of March ABC then earns another $70,000 on the next project milestone in March It is allowed to issue a quarterly invoice at the end of March, so it issues an invoice for $150,000 By using accruals, ABC has recognized $50,000 of revenue and receivables in January, $30,000 in February, and $70,000 in March, rather than recognizing all $150,000 in March, when it issues an invoice to the customer You should not use accrued receivables if you cannot justify to an auditor that there is a clear obligation by the customer to pay the company for the amount of the accrued receivable Otherwise, there is a presumption that the business has not yet reached the point where the customer has a clear obligation to pay If you use accrued receivables, expect auditors to pay particular attention to their justification For example, you should not accrue receivables in a case where a business is providing services under a fixed fee contract, and it earns revenue only when the entire project is complete and approved by the customer Revenue has not really been earned prior to completion, so there should be no accrual prior to that point
- 1. How important does Accounts receivable for small business and why? Discuss
- 2. How to define Inter company Transaction in Account Receivable? Discuss
- 3. Explain What are the issues related with Accounts receivable? Discuss
- 4. The accounting process involves all of the following except
Options- A. identifying economic transactions that are relevant to the business
- B. analyzing and interpreting financial reports
- C. communicating financial information to users by preparing financial reports
- D. recording nonquantifiable economic events Discuss
- 5. What determines the value of an item?
Options- A. the capital required to build the factory
- B. the unlimited wants of the consumers
- C. the resources consumed in production
- D. the amount of goods that are produced Discuss
- 6. How debtors play its role in Accounts receivable? Discuss
- 7. What are the goals of Accounts receivable? Discuss
- 8. How is a journal entry recorded? Discuss
- 9. Key Difference between Indian accounting standards and international accounting standards is: Discuss
- 10. What is the difference between finance and accounts? most of the companies having a different section like finance and accounts. why they aren't had only single section neither finance nor accounts? Discuss
Accounting and Finance problems
Search Results
Correct Answer: Accounts Receivables help small businesses by providing short-term liquidity Also continued sales on credit provide the much needed continuity for small businesses
Correct Answer: Before answering the above question let us first understand the meaning of Intercompany transactions Intercompany transactions are those transactions that takes place between two or more entities of the same group of company So the receivable of one entity would the payable of another entity All intercompany transactions are eliminated befor preparing the final Balance sheet of the group company
Correct Answer: Issues related to AR 1 Invoice discrepancies / no proper documents 2 Services / goods delivered not satisfactory 3 Customer do more negotiation even your invoice as per agreed terms and conditions 4 Very Important issue if no proper follow up from your side my result you receivable to Bad Debts
Correct Answer: analyzing and interpreting financial reports
Explanation:
The three steps in the accounting process are
1. Identification,
2. Recording, and
3. Communication.
Hence, analyzing and interpreting financial reports is not involved in the accounting process.
Correct Answer: the capital required to build the factory
Explanation:
Value is the monetary worth of something, in this case, it is an item.
In option A, since it is talking about capital which is measured in monetary terms.
The value of an item is determined by its quality and its age. Often antiques with good quality are sold in the market with a high value and are sometimes auctioned.
Correct Answer: Debtors are the main role of the business he is the entire back bone of the business The goodwill of the concern is in the hands of debtors because he is the person who takes our product or raw material to the customer or manufacture so he is takes the main role in the business in finance and business development
Correct Answer: As sales occurs every customer is not able to pay the bills that's where A/R are occurs the goal of A/R is to maintain summarize & record all the transactions related to unpaid a/c or future collections or A/R
Correct Answer: A journal entry is recorded accourding to the rules of debit and creditfor example goods sold for Rs 50000 for cash ----to record this -- identify the accounts involved-- iegoods A/cand Cash A/cgoods is a real account and cash is also a real accountdebit and credit rule for Real accounts is DEBIT WHAT COMES IN CREDIT WHAT GOES OUT according to this--cash is coming to the organisation and goods is leaving from the organisation--Entry for this is Cash A/c Dr 50000 to Goods A/c or Sales A/c 50000 ( For Cash Sales )
Correct Answer: In international accounting LIFO and extraordinary items are prohibited In international accounting, proposed dividend entry is made in the Year in which it is declared, but in Indian Accounting Standards Proposed Divided entry is passed in the year for which dividend is declared eg Dividend for 09-10 declared in AGM on 14 Sept 2010, Financial (Accounting) Year = 2009-10 In Indian Accounting entry would be passed in 2009-10 Accounts books, but in International Accounting entry would be passed in the year 2010-11 Accounts books
Correct Answer: Finance:It is the branch of economics that studies the management of money and other assetsIn simpler terms it can be defined as the commercial activity of providing funds and capitalIt addresses questions like -- what funds are required by the org & How they can be raised & How they have to be allocated etc Accounts: It is the occupation of maintaining and auditing records and preparing financial reports for a business Accounts provides quantitative information about finances It addresses issues like what amount of funds have been allocated to various activities, how the book-keeping is being done etc Both functions are distinct but complimentary to each other Finance and accounts are highly specilized and distinct areas and hence most organizations have seperate sections of finance and accounts
Comments
There are no comments.More in Interview:
Programming
Copyright ©CuriousTab. All rights reserved.