Accounting for Receivables – Using the Information on the Financial Statements

Evaluation of Short-term Liquidity Collection of trade receivables has a significant impact upon a company’s cash position. Four ratios assist in evaluating short-term liquidity: 1.The current ratio (Current assets ÷ Current liabilities) measures a company’s ability to satisfy its short-term debts. 2.The acid test ratio or quick ratio measures a company’s ability to satisfy its short- term debts immediately. (Cash […]

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Accounting for Receivables

Different types of receivables: A/R, NOTES OTHER (GST RECOVERABLE, LOANS TO EMPLOYEES – NON-TRADE REC. How to account for  bad debts : 1. Direct write off 2.Estimate (allowance) Which is more accurate? –Direct write off does not match expenses and rev. How do we estimate? – percentage of sales, percentage of receivables Notes Receivable Discussion: the difference between notes and […]

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