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Summary Trade and other Receivables R125,00   Add to cart
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  3. University Of The Witwatersrand (wits)
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  5. Financial Accounting 1 (ACCN1010)

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Summary Trade and other Receivables
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Trade and Other Receivables summarises selling on credit and how to recognise these transactions in the accounting records. This document explains the definition, classification, and recognition criteria of trade and other receivables according to the Conceptual Framework. Credit Losses, Credit All...

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  • January 15, 2024
  • January 16, 2024
  • 8
  • 2023/2024
  • Summary

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  • trade and other receivables

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Trade and other receivables
The nature of accounts receivable:

• Supplier sells goods on credit.
• A good/service has been supplied to the customer.
• No cash has flown from the customer to the supplier.
• Accrual base of accounting: recognise the revenue when the goods are sold or the
services are rendered.

DR Accounts Receivable
CR Revenue

Accounts receivable and the definition of an asset:

Definition:

1. Present economic resource
• Right has the potential to produce economic benefits.

2. Controlled by the entity
• Arise from contractual rights.

3. As a result of past events.

Recognition criteria:

Relevance:
1. Existence uncertainty.
2. Probability of an inflow of economic benefits.

Faithful representation:
1. Measurement uncertainty.

Accounts receivable and IAS 32 and IFRS 9:

Financial Instrument:
• Defined per IAS 32 as a contract that gives rise to a financial asset of one entity and
a financial liability of another entity.

Customer = receives goods/services and has an obligation to pay.
Supplier = delivers goods and has the right to receive cash.

• Financial asset as per IAS 32: contractual right to receive cash or another financial
asset.

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