Local Customers
Code: 1141Account Information
| Financial Statement | Statement of Financial Position |
| Normal Balance | Debit |
Definition
Receivables from local customers
Note: This account may be broken down into sub-ledgers as needed (e.g., customer/supplier/bank names or branches).
Common Journal Entries
Dr. Local Customers
Cr. Sales
Dr. Cash in Hand
Cr. Local Customers
Dr. Sales Returns
Cr. Local Customers
Dr. Discount Allowed
Cr. Local Customers
📐 IFRS vs US GAAP Accounting Treatment
IFRS uses forward-looking ECL; GAAP uses incurred loss model
❓ Frequently Asked Questions
A: Accounts Receivable are amounts owed to a company by its customers for goods or services sold on credit. These amounts represent a current asset on the balance sheet and are expected to be collected within one year.
A: When a credit sale is made, the following entry is recorded: Dr. Accounts Receivable (for the full invoice amount including tax), Cr. Sales Revenue (for the sales amount excluding tax), Cr. Output VAT (for the tax amount).
A: The Allowance for Doubtful Accounts is an estimate of the portion of accounts receivable that may not be collected in the future. It is created with the entry: Dr. Bad Debt Expense, Cr. Allowance for Doubtful Accounts. The allowance appears as a deduction from accounts receivable on the balance sheet.
A: When a specific debt is determined to be uncollectible, it is written off with the entry: Dr. Allowance for Doubtful Accounts, Cr. Accounts Receivable (specific customer). This entry does not affect the income statement because the expense was already estimated when the allowance was created.
A: Accounts Receivable is a balance sheet asset representing amounts owed by customers, while Service Revenue is an income statement account representing the value of services provided. When a service is provided on credit, Service Revenue is credited and Accounts Receivable is debited.