Business Accounting

Business Accounting

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This historic book may have numerous typos and missing text. Purchasers can usually download a free scanned copy of the original book (without typos) from the publisher. Not indexed. Not illustrated. 1920 edition. Excerpt: ...an account is overdue is only one criterion by which its realizability may be judged. The collection methods of the creditor may be at fault, the debtor may for a time be financially embarrassed, collateral may have been deposited with the creditor as a protection against loss, the general financial condition of a community in which the debtor lives may be temporarily under a physical handicap--as after a disastrous fire, earthquake, bad harvest, or the bankruptcy of an important local enterprise. All the foregoing facts need consideration before classifying a particular account. An account receivable which seems to be bad may ultimately be collected and therefore no account should be ruled off the ledger unless its status as non-collectible is established beyond all reasonable doubt; e.g., if an execution has been returned unsatisfied or the debtor has received a discharge in bankruptcy. When accounts are ruled off, usually no further efforts are made to collect them; also, embezzlement of cash received on a closed account is easier than it would be if the account were open and thus invited attention. 4. Accounting for Bad Debts As explained in Volume I, Chapter XXIX, the method of accounting for bad debts is to credit a reserve account entitled Reserve for Bad Debts at the end of each period with the estimated loss for that period. The offsetting debit is made to the expense account of Bad Debts. When a customer's account proves uncollectible, it is written off by charging it to the reserve account. Inasmuch as the reserve is an estimate of probable loss, the accuracy of which is subject to test in later periods, the probability exists of the loss being under-or over-estimated. If underestimated, it is apparent that the asset...show more

Product details

  • Paperback | 106 pages
  • 189 x 246 x 6mm | 204g
  • Rarebooksclub.com
  • United States
  • English
  • black & white illustrations
  • 1236900782
  • 9781236900784