ACCTMIS 2000 Midterm: ACCTMIS 2000 Credit Side Balance Notes
4 Oct 2018
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Credit side balance before the bad debt expense adjustment less accounts receivable have been written-off than expected overestimated bad debt expense. Requires an analysis of the accts receivable balances by the length of time they have been unpaid, longer the time the less likely to be paid. Used to calculate the bad debt expense estimate. The ending number isnt the bad debt expense estimate!! it is the required ending credit balance in allowance for bad debts. Considered an asset on the balance sheet until it is sold. Only when it is sold is the cost recorded as an expense on income statement (cost of goods sold) Expenses are to be recorded in the same year they help to generate revenue. Revenue is earned when the sale is made, thus the expense cost of goods sold must be recorded in the same year. Used to calculate ending inventory on balance sheet and cost of goods sold on income statement.
