Describe How Accounts Receivable Arise and How They Are Accounted

question 39

Essay

Describe how accounts receivable arise and how they are accounted for,including the use of a subsidiary ledger and an allowance account.

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Definitions:

GAAP

Generally Accepted Accounting Principles, which are a set of accounting standards and principles used in the United States.

Successful-Efforts Method

An accounting approach used in the oil and gas industry where costs are capitalized only if they lead to successful finding of new oil or gas reserves.

Drilling

The process of creating holes in the earth's surface in preparation for the exploration or extraction of resources, such as oil and gas.

Oil Wells

Structures drilled into the earth for the purpose of extracting petroleum and other hydrocarbons.