Concept explainers
In the revenue cycle, the most significant accounts typically include revenue and accounts receivable. (T/F)
Introduction: Account receivable is an amount of money which company has to receive from someone for any provided service or for sale of product. A revenue cycle is the process that starts with receiving the order, approving the credit sale, dispatching and shipping the goods, billing the customer and receiving the cash.
To determine: If the statement is true or false.
Answer to Problem 2CYBK
True
Explanation of Solution
A revenue cycle includes transactions related to revenue that begins with receiving the order and end and collecting the cash from the customer. Account receivable is the average number of days or time that required to collect the payment from the customer with respect to the credit sales. The company desire to collects is due as soon as possible to reduce its revenue cycle. Thus, the most significant account include revenue and account receivable.
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Chapter 9 Solutions
Auditing: A Risk Based-Approach (MindTap Course List)
- Refer to Exhibit 9.1. Which accounts are relevant in the revenue cycle? Identify the relationships among them.arrow_forwardThe schedule of accounts payable should equal what?arrow_forwardDetermine if each statement represents the allowance (A) or direct write-off (DW) approach. On the balance sheet, accounts receivable are represented at net realizable value.arrow_forward
- What is the difference between ‘accounts payable (AP)’ and ‘accounts receivable (AR)’?arrow_forward01 : - What are Accounts Receivable — AR ? - What are Importance of Accounts Receivable ?arrow_forwardWe report accounts receivable in the balance sheet at the amount expected to be collected. Explain what this term means.arrow_forward
- Auditing: A Risk Based-Approach (MindTap Course L...AccountingISBN:9781337619455Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:Cengage LearningPrinciples of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College