Question

ASSIGNMENT Answer the following critical thinking questions: 1. Describe the common classifications of receivables. 2. Analyze and explain the use of the three inventory costing methods. 3. Evaluate and discuss how receivables and inventory are reported on the financial statements. Your submission should be a minimum of one page of content in length, answering each question with a substantive paragraph of 4-5 sentences in length. Please type the question as well as your answer. Cite any source utilized in APA format.

Answer 1

Generally the Accounts Receivables means the amount is due from them for selling the goods or services and Generally the accounts receivables are Commonly classified as follows:

a. Accounts Receivables

b. Notes Receivables

c. Other Receivables

Accounts Receivables means are the amount that customer owed to company for normal credit period
Notes Receivables generally means the amount that customer or other owed to company who have signed the promissory notes in acknowledgement of Debts.

Therefore above both receivable generated from normal business therefore they are known as trade receivables but there are other type of receivable are present.

2.There are following methods are well accepted valuation methods of Inventory

a. Specific Identification Method

b. First in First Out (FIFO)

c. Last in First Out (LIFO)

In the first method, Actual cost incurred charge to specific identified unit of product. The companies find it easy to apply in situation purchase and sale are large number as such are cars.

In the Second method, cost of first good purchased are those are those charged to cost of goods sold when the company sale the goods.

In the Third method, cost of recent good purchased are those are those charged to cost of goods sold when the company sale the goods.

3. Reporting of Accounts Receivables & Inventory:

Accounts Receivables, Notes Receivables and Other receivables are reported in Financial statements under Current Assets if they are expected to recover within 12 Months from the closure of Financial Statements and otherwise they are reported under Non Current Assets.

Inventory are generally are expected to sold within the 12 Months from the closure of Financial Statements therefore they are generally classified under Current Assets as Separate head Inventories.