In the following article, the author uses Vann Company as an example to present elementary accounting concepts in a way that illustrates what he refers to as “the profound simplicity of financial accounting” (p. 753).
- Jones, D. J. (2012). Visualizing accounting transaction flows into financial statements. American Journal of Business Education, 5(6), 753–757.
- For this discussion, read the Jones article linked above, and consider the loan Vann Company made to Brown Company. In 3–4 paragraphs, discuss why Vann Company records the interest receivable in August rather than waiting until the loan is due in November to record the interest. Address the following questions in your post. Feel free to include other information you think could be relevant to exploring this strategy or related accounting principles effectively:
- What are the risks of waiting until November to record the interest revenue and cash received amounts to match?
- Would the balance sheet and income statement work if they recorded the interest receivable without recording the revenue?
- What transactions will the company record in November when Brown Company actually receives the accrued interest?
This is the first discussion in this course. Take a moment to review the Discussion Participation Scoring Guide to learn how your instructor will evaluate your discussions.
0 comments