Simpleton Question No. 1- Profit and Loss Statement.


T

T A R T

Hi people,

Why aren't Accounts Receivable figures shown in the Profit and Loss
Statement?

Is it because they have already been accounted for in the general ledger and
have affected the owner's equity and putting them on the profit and loss
statement will cause them to be added again, or,

Is it because Accounts Receivable accounts are accounts which are expected
revenues rather than actual realised revenues?

Am I correct in thinking that the owner's equity in the trial balance has
already taken Acc. Rec revenues into account?

Thanks,

T
 
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P

Paul

T A R T said:
Why aren't Accounts Receivable figures shown
in the Profit and Loss Statement?
They sorta are, in that Income is greater than cash received by the amount
of the Accounts Receivable.

But the actual place they get shown is the Balance Sheet as A/R is an asset
of the business.


Is it because Accounts Receivable accounts are accounts which are expected
revenues rather than actual realised revenues?
They are recorded revenues, that are expected to be received in the future.


Am I correct in thinking that the owner's equity in the trial balance has
already taken Acc. Rec revenues into account?

More or less. The collection of A/R itself wouldn't impact total assets,
just move them around.
 
W

Wayne Brasch

T A R T said:
Hi people,

Why aren't Accounts Receivable figures shown in the Profit and Loss
Statement?

Is it because they have already been accounted for in the general ledger and
have affected the owner's equity and putting them on the profit and loss
statement will cause them to be added again, or,

Is it because Accounts Receivable accounts are accounts which are expected
revenues rather than actual realised revenues?

Am I correct in thinking that the owner's equity in the trial balance has
already taken Acc. Rec revenues into account?

Thanks,

T
The entry to get Accounts Receivable on the books are a debit (increase) to
Accounts Receivable and a credit (increase) to Sales (or some other Revenue
account). Sales gets closed into Owner's Equity at the end of the
accounting period at the same time expenses do. Accounts Receivable are a
Balance Sheet account while Sales (Revenue) are an Income Statement account.

Wayne Brasch, CPA, M. S. Taxation
 
M

Mike Block, C.P.A.

T A R T said:
Hi people,

Why aren't Accounts Receivable figures shown in the Profit and Loss
Statement?

Is it because they have already been accounted for in the general ledger and
have affected the owner's equity and putting them on the profit and loss
statement will cause them to be added again, or,

Is it because Accounts Receivable accounts are accounts which are expected
revenues rather than actual realised revenues?

Am I correct in thinking that the owner's equity in the trial balance has
already taken Acc. Rec revenues into account?

Thanks,

T

Accounts Receivable figures are never shown in the Profit and Loss
Statement. They are shown as Assets in the Balance Sheet. The balance
in the Accounts Receivable is already included in the Sales figure
which is shown in the Profit and Loss Statement. Accounts Receivable
is that part of Sales for which no payment have been received as yet.
Yes, this is because they have already been accounted for in the
general ledger and have affected the owner's equity and putting them
on the Profit and Loss Statement will surely cause them to be added
again.
Accounts Receivable are not expected revenues but they are actual
realised revenues.

Mike Block, C.P.A.
Intuit paid me to make QuickBooks better!
http://www.blocktax.com/
http://www.quickbooks-add-ons.com/
 
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T

T A R T

Mike Block said:
"T A R T" <[email protected]> wrote in message


Accounts Receivable figures are never shown in the Profit and Loss
Statement. They are shown as Assets in the Balance Sheet. The balance
in the Accounts Receivable is already included in the Sales figure
which is shown in the Profit and Loss Statement. Accounts Receivable
is that part of Sales for which no payment have been received as yet.
Yes, this is because they have already been accounted for in the
general ledger and have affected the owner's equity and putting them
on the Profit and Loss Statement will surely cause them to be added
again.
Accounts Receivable are not expected revenues but they are actual
realised revenues.

Thanks.

After working through several examples I now understand how it works.

Comments much appreciated, all.
 

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