Business Administration 2257 Lecture Notes - Lecture 5: Operating Expense, Accounts Receivable, Perpetual Inventory

• School: Western University
• Department: Business Administration
• Course: Business Administration 2257
• Professor: Ian Dunn

Document Summary

To record sales revenue, an asset(typically cash or accounts receivable) is debited and sales revenue is credited. If a customer had paid in advance, a liability (unearned revenue) is debited and sales revenue is credited. Sales invoice- provides support for a credit sale. They are collected on behalf of the federal government. Sales taxes collected from selling a product or service are recorded as a liability unil they are paid to the government. Fob desinaion and fob shipping point indicate who is responsible for shipping costs. Fob desinaion seller is responsible for geing goods to their intended desinaion: freight costs incurred by seller on outgoing merchandise are an operaing expense to the seller, theses costs are debited to freight out or delivery expense. Fob shipping point the buyer must pay the shipping costs. When customers return goods, or are given a reduced price, the seller will either return cash to the buyer, or reduce the buyer"s accounts receivable.