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trade receivables yr end balance

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AA Exams › trade receivables yr end balance

  • This topic has 1 reply, 2 voices, and was last updated 10 months ago by Kim Smith.
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  • August 30, 2021 at 5:52 am #633461
    Noah098
    • Topics: 936
    • Replies: 352
    • ☆☆☆☆☆

    As per my understanding, any post yr end credit notes issued LEADS TO REDUCTION in trade receivables balance at the year end BUT any post yr end cash receipts, DO NOT REDUCE trade receivables balance at the year end.

    can you explain why is it so?

    August 30, 2021 at 8:43 am #633486
    Kim Smith
    Keymaster
    • Topics: 88
    • Replies: 6093
    • ☆☆☆☆☆

    Credit note is adjusted only if it provides evidence that the amount should NOT be included in revenue/receivables at the y/e date – as we have described in detail many times.

    Cash receipts provide confirmatory evidence that the customer OWED the debt – i.e. they OWED it – they were a DEBTOR. The debt was NOT settled at the reporting date – you cannot make it so retrospectively (!)

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