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Trade receivables

FAR Chapter 11 · Area II · Blueprint II.B

Selling on credit creates an asset that is worth less than its face amount, because some customers never pay and some send goods back. The Blueprint asks you to calculate trade receivables and their allowances, to account for transfers such as factoring and pledging, to prepare rollforwards, and to reconcile the subledger to the general ledger. Expect a simulation built on an aging schedule and an allowance account.

In this chapter

1. Measuring trade receivables
2. The allowance for credit losses
3. Write-offs and recoveries
4. Sales returns
5. Using receivables to raise cash
6. Factoring with and without recourse
7. Rollforwards and the subledger reconciliation
8. Notes receivable, discounting and securitization

This chapter has 8 lessons, 52 practice MCQs with explanations and 20 simulations, plus flashcards and a recall sheet.

What this chapter covers

• Allowance for credit losses and sales returns
• factoring, pledging, assignment and secured borrowings
• rollforwards
• subledger to ledger reconciliation

Chapter 10: Cash and cash equivalents · Chapter 12: Inventory