BU127 Lecture Notes - Lecture 7: Bank Reconciliation, Bank Statement, Internal Control
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BU127 Full Course Notes
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Chapter 7: reporting and interpreting sales revenue, receivables, and cash: Revenue principle requires that revenues be recorded when earned. Avoid losses due to fraudulent credit card sales. Company must pay the credit card company a fee for the service it provides when credit card sales are made. The customer promises to pay the company in the future for the purchase when companies allow customers to purchase merchandise on an open account. They are offered a sales discount to encourage early payment when customers purchase on open account. Recorded in a separate account called sales returns and allowances: damaged merchandise, returned merchandise. Companies record credit card discounts, sales discounts, and sales returns and allowances separately to allow management to monitor these transactions. Gross profit percentage = gross profit over net sales. Accounts receivables are created when companies have sales to customers on open accounts. Notes receivable are written promises from another party to pay with specified terms.
