Receivables Receivables can be separated into two categories, trade receivables, and nontrade receivables. Trade receivables are further categorized as Accounts Receivable, and notes receivable. Accounts receivable are accounts for which credit sales were allowed. Thus, accounts receivable should only be associated with the sale of goods on credit. They should not include other forms of receivables.
Notes receivables represent short-term lending activity of the firm.
In many cases the receivables that are not credit sale receivables will be grouped under the label notes receivable. Nontrade receivables include advances to officers, advances to subsidiarys, damage deposits, deposits for guarantees, and dividend and interest receivables. Recording Receivables Recording recievables occur when the goods have been transfered to the customer. Some firms entice customers to pay early by offering discounts if the account is paid in full by the end of a specified time period. When discounts are offered firms must decide how to record the discount.