What is Notes Receivable? The notes receivable is a return promise by the buyer to repay a certain due amount to the seller within a certain time period. A note receivable is a written agreement between the maker and payee. It is also used to finance short-term funds to clients or customers. The notes receivable … Read more
Aging Accounts Receivable Method Under the aging accounts receivable method, the uncollectible expense amount is determined based on the age of the account receivable. The accounts receivable which are old have a greater chance of being bad debt. The probability is distributed among the account receivables depending often their ages. In general, the longer an … Read more
Percentage of Credit Sales Method Some companies estimate their bad debts as a percentage of credit sales. The percentage of credit sales method estimates bad debt expense or uncollectible expense on the basis of the percentage of net credit sales. In other words, under this approach or method, the allowance amount at the end of … Read more
Percentage of Accounts Receivable Method Under the percentage of accounts receivable method, a company derives an estimate for the value of bad debts under the allowance method to calculate bad debts as a percentage of the account receivable balance. For example, if a company has Rs. 1,00,000 in accounts receivable at the end of an … Read more
Direct write-off method and Allowance method Allowance method and direct written method definition and journal entries The Direct write off method Under the direct write off method, collectible account expense account or bad debt expense has been declared in uncollectible. In other words, the bad debt is occurred the accountant records it in a financial … Read more
Weighted Average Cost (WAC) Method Weighted average cost (WAC) per unit is calculated by dividing the units available for sale from the cost of goods available for sale. Weighted average cost (WAC) method also called a weighted average or weighted average method. According to this method, the average cost for the good available for sale … Read more
Last-In-First-Out (FIFO) method LIFO method definition In last in first out (LIFO) method, the recently purchased goods are sold or used at first. The beginning and earlier goods purchased are ending inventory. This method is applicable to the organization which durable goods. The advantages of this method over the FIFO method is that it helps … Read more
First-In-First-Out (FIFO) Method FIFO method definition First-in-first-out (FIFO) method is an accounting tool used to find out the value or cost of inventory (ending inventory) and cost of goods sold (COGS). According to this method, the inventory which is purchased at first is sold out or used at first. This method is applicable to the … Read more
Inventory errors: Beginning and Ending Inventory and Income statement correction The errors in recording inventories give the correct reason. Sometimes it is overstated on profit and sometimes it understates on profit. Actually, the mistake in recording the beginning inventory and closing inventory is called inventory errors. The beginning inventory like an expense, when it is … Read more
Inventory estimation: Gross profit method definition-formula-example Inventory estimation method The inventory estimation is used by the business concern in the case when some events occur or if a business is a retail business. This method forecast the price and it gets near the price of the actual price. The inventory estimation includes two methods first Retail inventory … Read more