CEBU CPAR CENTER, INC. RECEIVABLES - THEORY 1. Receivab Receivables les denomin denominated ated in a foei foei!n !n c"enc c"enc# # s$o"ld s$o"ld be a. Tanslated Tanslated to local local c"enc# c"enc# "sin! t$e t$e e%c$an!e e%c$an!e ate at at t$e time t$e eceivables eceivables aise b. S$o&n S$o&n at face face val"e val"e of t$e foei!n foei!n c"enc# c"enc# c. Tans Tanslated lated to local c"enc# c"enc# "sin! "sin! t$e e%c$an e%c$an!e !e ate at balance balance s$eet s$eet date d. Tanslated Tanslated to local local c"enc# c"enc# "sin! t$e t$e e%c$an!e e%c$an!e ate &$en &$en t$e balance balance s$eet s$eet is iss"ed iss"ed '. Tade Tade eceivabl eceivables es ae classified classified as c"ent c"ent assets assets &$en t$e# ae easona easonabl# bl# e%(ecte e%(ected d to be collected a. )it$ )it$in in one one #ea #ea b. )it$in )it$in t$e t$e noma nomall o(eat o(eatin! in! c#c c#cle le c. )it$in )it$in one #ea #ea o &it$in &it$in t$e nomal nomal o(eatin! o(eatin! c#cle c#cle &$ic$ev &$ic$eve e is s$ote s$ote d. )it$in one one #ea #ea o &it$in t$e t$e nomal nomal o(eatin! o(eatin! c#cle &$ic$eve &$ic$eve is lon!e lon!e *. +ontade +ontade eceivab eceivables les ae classified classified as c"ent c"ent assets onl# if t$e# ae easonabl# easonabl# e%(ected e%(ected to be eali,ed in cas$ a. )it$in )it$in one #ea #ea o nomal nomal o(eatin! o(eatin! c#cle c#cle &$ic$e &$ic$eve ve is s$ote. s$ote. b. )it$in )it$in t$e t$e noma nomall o(eat o(eatin! in! c#c c#cle le c. )it$in )it$in one #ea #ea o t$e noma nomall o(eatin! o(eatin! c#cle c#cle &$ic$ &$ic$eve eve is lon!e lon!e d. )it$in one one #ea #ea t$e len!t$ len!t$ of of t$e o(eatin o(eatin! ! c#cle not&it$s not&it$standin! tandin! . Installments Installments eceivable eceivable aisin! fom sales sales of $o"se$old $o"se$old a((liances a((liances s$o"ld s$o"ld be classified classified as as a. C" C"en entt asse assets ts b. +onc +onc" "e ent nt asse assets ts c. C"e C"ent nt assets/ assets/ $o&eve $o&eve t$e amo"nt amo"nt not eali,able eali,able &it$in &it$in one #ea #ea s$o s$o"ld "ld be disclose disclosed d if mateial d. +one of of t$ t$ese 0. In t$e case of lon!-tem lon!-tem installm installments ents eceivab eceivable le eal estate estate installme installment nt sales2 &$ee &$ee a ma3o ma3o (otion of t$e eceivables &ill be collected be#ond t$e nomal o(eatin! c#cle a. T$e entie entie eceiva eceivabl bles es ae classif classified ied as c"en c"entt &it$o &it$o"t "t discl disclos" os"e e of t$e amo"n amo"ntt not not c"entl# d"e b. T$e entie entie ece eceivab ivables les ae class classifie ified d as nonc" nonc"ent ent c. Onl# t$e (otion c"entl# d"e is classified as c"ent c"ent and t$e balance balance as nonc"en nonc"entt d. T$e entie entie eceivable eceivables s ae classified classified as c"ent c"ent &it$ disclos" disclos"e e of t$e amo"nt not not c"entl# c"entl# d"e 4. Receivables Receivables fom s"bsidiaies s"bsidiaies and affiliates affiliates if si!nificant si!nificant s$o"ld s$o"ld be classified as a. C" C"en entt asse assets ts b. +onc +onc" "e ent nt asse assets ts c. Eit$ Eit$e e as nonc"ent nonc"ent o c"ent c"ent de(endin de(endin! ! on t$e e%(ectatio e%(ectation n of eali,in! eali,in! t$em &it$in &it$in one #ea o ove one #ea d. Inta Intan! n!ib ible le asse assets ts 5. Receivab Receivables les fom offices offices diectos diectos and em(lo#ees em(lo#ees fo !oods sold o sevices sevices endeed endeed in t$e odina# co"se of b"siness a. Ae consideed consideed c"ent c"ent if (o(e (o(e contol is e%ecised e%ecised in !antin! cedit cedit and t$e t$e acco"nts acco"nts ae c"entl# collectible b. Ae not not incl"d incl"ded ed in tade tade acco"nts acco"nts eceivab eceivable le c. Ae incl"de incl"ded d in c"ent assets assets even even if t$e eceivable eceivables s ae act"all# act"all# loans loans and advances advances and t$e collection is "nli6el# &it$in a #ea d. Ae al&a#s al&a#s classifi classified ed as nonc"e nonc"ent nt 7. Cedit Cedit balance balances s in acco"nts acco"nts eceivabl eceivable e s$o"ld s$o"ld be classified classified as as a. C" C"e ent nt li liab abil ilit it# # b. 8at 8at of of acco acco"n "nts ts (a#a (a#able ble c. +onc +onc" "e ent nt liab liabil ilit it# # d. 9ed"cti 9ed"ction on fom acco"nts acco"nts eceivab eceivable le
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:. A met$od of estimatin! do"btf"l acco"nts t$at foc"ses on t$e income statement at$e t$e balance s$eet is t$e allo&ance met$od based on a. 9iect &iteoff c. Cedit sales b. A!in! of tade acco"nts eceivable d. Balance of acco"nts eceivable 1;. A met$od of estimatin! do"btf"l acco"nts t$at em($asi,es asset val"ation at$e t$an income meas"ement is t$e allo&ance met$od based on a. A!in! of eceivables b. 9iect &iteoff c. <oss sales d. Cedit sales less sales et"ns and allo&ances 11. A com(an# "ses t$e allo&ance met$od fo eco!ni,in! do"btf"l acco"nts. T$e ent# to ecod t$e &iteoff of a s(ecific "ncollectible acco"nt a. Affects neit$e net income no &o6in! ca(ital b. Affects neit$e net income no acco"nts eceivable c. 9eceases bot$ net income and &o6in! ca(ital d. 9eceases bot$ net income and acco"nts eceivable 1'. )$en t$e allo&ance met$od of eco!ni,in! bad debt e%(ense is "sed t$e enties at t$e time of collection of an acco"nt (evio"sl# &itten off &o"ld a. 9ecease t$e allo&ance fo do"btf"l acco"nts b. Incease net income c. Have no effect on t$e allo&ance fo do"btf"l acco"nts d. Have no effect on net income 1*. )$en a s(ecific c"stome=s acco"nt eceivable is &itten off as "ncollectible &$at &ill be t$e effect on net income "nde eac$ of t$e follo&in! met$ods of eco!ni,in! bad debt e%(ense> Allo&ance 9iect &iteoff a. +one 9ecease b. 9ecease +one c. 9ecease 9ecease d. +one +one 1. If eceivables ae $#(ot$ecated a!ainst boo&in!s t$e amo"nt of eceivables involved s$o"ld be a. 9isclosed in t$e statements o notes b. E%cl"ded fom t$e total eceivables &it$ disclos"e c. E%cl"ded fom t$e total eceivables &it$ no disclos"e d. E%cl"ded fom t$e total eceivables and a !ain o loss is eco!ni,ed bet&een t$e face val"e and t$e amo"nt of boo&in!s 10. It is a (edetemined amo"nt &it$$eld b# a facto as a (otection a!ainst c"stome et"ns allo&ances and ot$e s(ecial ad3"stments. a. E?"it# in assi!ned acco"nts c. Commission b. Sevice c$a!e d. @acto=s $oldbac6 14. )$ic$ of t$e follo&in! is t"e &$en acco"nts eceivable ae factoed &it$o"t eco"se> a. T$e tansaction ma# be acco"nted fo as eit$e a sec"ed boo&in! o as a sale. b. T$e eceivables ae "sed as collateal fo a (omisso# note iss"ed to t$e facto b# t$e o&ne of t$e eceivables. c. T$e facto ass"mes t$e is6 of collectibilit# and absobs an# cedit losses in collectin! t$e eceivables. d. T$e financin! cost s$o"ld be eco!ni,ed atabl# ove t$e collection (eiod of t$e eceivables. 15. +otes eceivable disco"nted &it$ eco"se s$o"ld be a. Incl"ded in total eceivables &it$ disclos"e of contin!ent liabilit# b. Incl"ded in total eceivables &it$o"t disclos"e of contin!ent liabilit# c. E%cl"ded fom total eceivables &it$ disclos"e of contin!ent liabilit# d. E%cl"ded fom total eceivables &it$o"t disclos"e of contin!ent liabilit# - end -
