Accounting

Weekly Summary

February 29, 2012

In weeks one and two, the class covered three chapters. Week one covered chapters eight and nine, which discussed accounts receivables, plant assets, natural resources, and intangible assets. Week two covered nine and ten, which discussed assets and liabilities. Chapter eight provided information on receivables. The term receivables’ refers to the amount due from individuals and companies. Receivables are claims that expected to be collected in cash. Receivables are classified as accounts receivables, notes receivable, and other receivables. Accounts receivables are described as amounts owed by customers for accounts. Companies generally try to collect the cash within 30 to 60 days from the account start date. Notes receivables are classified as claims for which formal instruments of credit which are includes proof of the debt. Notes receivables usually extend for time periods of 60- 90 days. Other receivables are nontrade receivables. Examples are loans, advances to employees, income tax refund, and interest receivables. Items are not a result from business operations, so companies classify and report them separately.

Chapter nine talked about plant assets and its three features which are physical substance that is used in daily operations of business, and are not for sale to customers. Another key thing of plant assets is that accounts must be kept in good operating condition. Another important topic we addressed this week was the value of notes receivables from companies. Notes can be disposed in the following ways, the first one is when it reaches maturity and is honored by the company, for example is when the payee defaults the company must make adjustments to the account.

Chapter 10 covered information on current and long-term liabilities. Current liabilities are debts that companies expect to pay from existing current assets or through creating other current liabilities. The company is expected to pay the debt within...