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The Outstanding Cheques Should Always Decrease in Subsequent Months If

question 99

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The outstanding cheques should always decrease in subsequent months if no new cheques have been issued by the company.


Definitions:

Allowances for Doubtful Accounts

A contra-asset account that reduces the total amount of accounts receivable to reflect the portion that is estimated not to be collected.

Net Realizable Value

The estimated selling price in the ordinary course of business, minus the estimated costs of completion and the costs necessary to make the sale.

Bad Debt Expense

A provision for accounts receivable that are considered unlikely to be collected.

Percentage of Credit Sales

An accounting method used to estimate bad debts expense by applying a fixed percentage to the total credit sales of a period.

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