Add Signed Accounts Receivable Purchase Agreement with airSlate SignNow

Collate age attestation

what's up audit fans welcome to another video in my series analyzing accounting processes from an audit perspective today we're going to look at accounts receivable we're going to analyze the processes that are quite common identify control activities talk about risks of material misstatement and in part two of this video we'll look at common tests of internal controls as well as substantive tests so let's get into it [Music] welcome back to my regular subscribers and hi if you're new my name is amanda i really do love audit and i teach undergraduate audit at a major australian university and i have my phd in behavioral audit as well now today we're looking at accounts receivable so i guess the first thing we need to think about is our process so let me start writing here on my tablet so that you can see what's going on so when we start with the process we really want to think about what exactly is going on when we talk about accounts receivable so that's selling goods to a customer on credit so they're going to take the goods away and they're going to pay later so when we sell goods on credit there are a couple of different key processes we need to think about we need to think about the process for granting credit okay who gets credit how much do they get so the question is a process of approval and we want to know who gets it and then also how much they'll also often be terms for credit so how much you can buy from this particular entity and the repayment terms so repayment terms are usually you get a statement at the end of the month so there's granting credit and so when you grant credit nothing happens in terms of journal entries but these particular customers are approved to make sales or to make sales on credit now when you make sales of course if we think back to our introductory accounting then we know that the process is fairly straightforward so they take away the item so we go debit accounts receivable credit sales okay and then of course there's also the journal entry for inventory so debit our cost of goods sold credit out of our finished goods inventory so we've got the sales process then usually there is a process by which you have some sort of monthly statement so the monthly statement is really going to be a document that says okay here's the company logo and we're sending it to this particular accounts receivable customer you made these purchases worth these prices or these costs and then you've got a total let me just quickly add this up one eleven hundred okay so usually there is some sort of monthly statement that goes to our customers and that used to be mailed but now we'd probably see that emailed out to our customers on a monthly basis and...