Cash, Cash Equivalents and Receivables

Receivables

Definition and Explanation Accountants disclose receivables when the reporting company has the right to receive cash, some other asset, or services from another party. Generally, only existing legal rights are disclosed in the body of the balance sheet. Contingent (or potential) rights to collect may be disclosed in the footnotes if they are material and if …

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Recording uncollectible accounts expense and bad debts

The risk of extending credit arises from the possibility that the customer will not pay. This risk impacts both the measurement of income and the description of the receivables held by the seller. The accountant’s task involves consideration of these three issues: 1. What is the nature of the loss? 2. When does the loss …

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