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Wiley GAAP 2013: Interpretation and Application of Generally Accepted Accounting Principles by Joanne M. Flood

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CHAPTER 7

CASH, RECEIVABLES, AND PREPAID EXPENSES

Perspective and Issues

Definitions of Terms

Concepts, Rules, and Examples

Cash

Compensating balances

Cash not immediately available

Overdrafts

Petty cash

Receivables

Types of receivables

Valuation allowance for uncollectible amounts

Imputed interest

Lending and financing activities, including trade receivables

Pledging, assigning, and factoring receivables

Financial assets subject to prepayment

Certain Loans or Debt Securities Acquired in Transfers

ASC 310-30 in greater detail

Accounting for investments in loans acquired by transfer

Accounting for investments in pools of loans acquired by transfer

Accounting for investments in debt securities acquired by transfer

Disclosures

Prepaid Expenses

Types of prepaid expenses

Amortization

PERSPECTIVE AND ISSUES

Assets displayed on the statement of financial position are the resources available to the reporting entity to support its current and future operations. To provide information about liquidity, the assets are often divided into current and noncurrent assets. Current assets consist of cash and other assets that are reasonably expected to be realized in cash or sold or consumed during the normal operating cycle of the business. When the normal operating cycle is less than one year, a one-year period is used to distinguish current assets from noncurrent assets. If the operating cycle exceeds one year, the operating cycle is the proper period to use for current asset identification. When ...

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