THE ACCOUNTING TABLOID

A debut guide offers a detailed explanation of receivables.

Receivables, or “impending cash collections,” are essential to the financial health of most businesses and a basic component of any accounting system. The intent of this simply written manual is to explain the myriad types of receivables and show how they relate to the accounting cycle. Hall begins at the most basic level, illustrating the accounting equation of “Assets = Liabilities + Equity.” He briefly explains the accounting cycle to provide context for the subsequent discussion of receivables, a broad category that is then subdivided by topic. Each subject consists of a short chapter—sometimes just a few paragraphs—covering specifics, including sales returns and allowances, credit card payments, rent receivable, sales on installment, and more. Some topics, such as cash advances to employees, rebates, and loans receivable, are likely to be lesser known or perhaps even overlooked by those who lack experience with accounting systems. Often, the author will add some explanatory text to highlight the benefits of a particular element; for example, in discussing the disposition of accounts receivable, Hall writes: “A quick way to improve the cash flow position is achieved by the selling of the accounts receivable or pledging them as security for loans.” The primary strength of this brief book is the multitude of examples—over 50 of them—used by the author to illuminate various aspects of receivables. These balance sheets, journal entries, tables, sample invoices, and the like are extremely helpful in depicting how receivables function in accounting. Included at the end of the manual are four “mini cases,” in which Hall poses some problems to solve; these cases demonstrate real-world application of the material. A legitimate criticism of this guide involves its restricted content; “receivables” is just a single class recorded in a business accounting system, and focusing on it in isolation may obscure a wider understanding of fiscal procedures. Still, for those who want a quick introduction to receivables alone, this book should prove to be a suitable choice.

Intentionally limited in scope; presents useful information on receivables.