tailieunhanh - Lecture Principles of accounting (2005): Chapter 9 - Needles, Powers, Crosson

Chapter 9 - Short-term financial assets. Chapter 9 focuses on the management of and accounting for four types of short-term assets: cash and cash equivalents, short-term investments, accounts receivable, and notes receivable. | Short-Term Financial Assets Multimedia Slides by: Gail A. Mestas, MAcc, New Mexico State University Chapter 9 Learning Objectives Identify and explain the management issues related to short-term financial assets. Explain cash, cash equivalents, and the importance of electronic funds transfer. Identify types of short-term investments and explain the financial reporting implications. Learning Objectives (cont’d) Define accounts receivable and apply the allowance method of accounting for uncollectible accounts. Define promissory note, and compute and record promissory notes receivable. Management Issues Related to Short-Term Financial Assets Objective 1 Identify and explain the management issues related to short-term financial assets Key Issues in Dealing with Short-Term Financial Assets Management must address three key issues regarding short-term financial assets Managing cash needs during seasonal changes Setting credit policies Financing receivables Managing Cash Needs During . | Short-Term Financial Assets Multimedia Slides by: Gail A. Mestas, MAcc, New Mexico State University Chapter 9 Learning Objectives Identify and explain the management issues related to short-term financial assets. Explain cash, cash equivalents, and the importance of electronic funds transfer. Identify types of short-term investments and explain the financial reporting implications. Learning Objectives (cont’d) Define accounts receivable and apply the allowance method of accounting for uncollectible accounts. Define promissory note, and compute and record promissory notes receivable. Management Issues Related to Short-Term Financial Assets Objective 1 Identify and explain the management issues related to short-term financial assets Key Issues in Dealing with Short-Term Financial Assets Management must address three key issues regarding short-term financial assets Managing cash needs during seasonal changes Setting credit policies Financing receivables Managing Cash Needs During Seasonal Cycles Most companies experience seasonal cycles of business activity during the year Sales may be weak or strong Expenditures may be high or low Companies must carefully plan cash inflows, outflows, borrowing, and investing Setting Credit Policies Companies sell on credit to be competitive and increase sales To increase the likelihood of selling to customers who will pay on time, companies develop control procedures and maintain a credit department Measuring the Effect of a Company’s Credit Policies Two common measures of the effect of a company’s credit policies are Receivable turnover Reflects the relative size of a company's accounts receivable and the success of its seasonal conditions and interest rates Average days’ sales uncollected Shows, on average, how long it takes to collect accounts receivable Compute the receivable turnover for Pioneer Corporation This means that, on average, receivables were turned into cash times during the accounting period Receivable Turnover