Provide examples of accounts that would be included under the heading ‘Receivables’ in the balance sheet.
2 What is the difference between accounts receivable and accrued revenue?
3 Which of the following companies is likely to have low accounts receivable in comparison to total sales:
Woolworths, Coca-Cola and QBE Insurance?
4 What is the difference between a bad debt and a doubtful debt?
5 Why do companies have an allowance for doubtful debts?
6 Outline the income statement approach to calculating the bad debts expense.
7 Outline the balance sheet approach to calculating the allowance for doubtful debts. What is an important
step to remember in this approach?
8 What purposes are served by special journals? What control information could be made more readily
available to management as a result of their use?
9 What considerations determine whether a special journal should be brought into use rather than placing
entries in the general journal? Is the need for a general journal ever eliminated?
10 On what should you base your selection of the special analysis columns to be included in the cash
payments journal?
11 Why should the sale of a fixed asset not be recorded in a simple sales journal?
12 Which special journal handles the following types of transactions?
a cash sales
b credit sales
c receipts from debtors
d payments to creditors
e cash purchases
f credit purchases
13 What is the purpose of a subsidiary ledger?
14 What are the advantages of a subsidiary ledger?
15 If a customer’s account in the debtors’ ledger shows a credit balance, does this necessarily indicate that an
error has been made?
16 Does the double-entry principle of an equal value of debits and credits in the system cease to apply when
subsidiary ledgers are being employed?
17 ‘Subsidiary ledgers involve unnecessary duplication, increase the opportunity for error and involve a breach
of the double-entry principle. Under no circumstances can their use be justified.’ Comment critically.
