I Have An Accounting I Question…. I’m Really Confused!?
Mar.01, 2010 in
General
This is my Discussion Question : You are an employee of a Wealth Management consultancy. As your first accounting assignment for the consultancy, you are auditing the chart of accounts for a client. You notice that the receivables are treated as assets and all payables as liability in the chart of accounts. Is that correct? Explain your answer
March 1st, 2010 at 3:58 pm
Yes, this is correct. Accounts receivable are accounts that you will be collecting in the future, which will be (and are currently) assets. Accounts payable are accounts to which you owe money to, such as businesses that provide you with services. Therefore, these accounts are liabilities.
March 1st, 2010 at 4:23 pm
Whether the receivables are considered assets will depend on what kind of accounting we’re talking about here. Receivables aren’t assets in, for example, “cash” accounting paradigms… and even some “fund” accounting paradigms.
The question, as asked, doesn’t really provide enough information…
…which would make it almost more of trick question, unless a major point of the lesson was to call attention to the difference. Only you, the questioner, knows that.
Absent that sort of situation, the question should be assumed to contain all the student needs to know to answer it pursuant to the lesson. Assuming, then, that the question can be taken on its face, the previous answerer is correct.