Includes services such as housing rents and meal plans. Tuition and other student services – maintained by Bursar’s Office.Types of receivables (list is not all inclusive):
Substantive records/supporting documentation – Support generated from a source separate from the general ledger (PeopleSoft) that corroborates the existence of the account receivable. Most often related to medical and patient revenues. The expected uncollectable amount of receivables is recognized as bad debts when recorded to the reserve account (debit bad debt expense/credit reserve account).Ĭontra revenue accounts – contractual discounts that off-set against a revenue account reducing the amount of revenue recognized. Reserve account – An account that offsets against an account receivable the expected amount of receivables that will not be collected. Records of accounts receivable written-off are to contain the reason for the write-off and must be maintained for audit purposes.Ĭontact the Controller’s Office if assistance is needed with establishing or monitoring an account receivable or reserve account.īad debts - Payments due from a third party that are deemed not collectible due to passage of time, collection efforts, or lack of legal enforcement. Decisions to establish a reserve account and write-off uncollectable accounts receivable are the responsibility of the unit business manager with input from the individual responsible for collecting accounts receivable.Īccount receivable balances must be supported by records that substantiate the amount due and these records must be maintained for audit purposes. To maintain proper segregation of duties, collection of accounts receivable should be performed by individuals within the business unit who are not responsible for billing and recording accounts receivable. A reserve account is established to recognize any accounts receivable, or any portion of, that is deemed not collectible. Analysis of large, long-term or a collection of like accounts receivable is performed monthly to determine if a percentage of the accounts will not be collected.
If the account receivable is not collected, it must be assessed to determine collectability. All accounts receivable should be collected within 30 days.
#Standard accounts receivable terms full
In the event the University has provided goods or services to individuals or entities outside the University and full payment is not immediately received, an account receivable must be recorded by the lead fiscal officer or unit business manager in the general ledger. Segregating responsibilities for recording, collecting and monitoring receivables establishes a sound control environment by not giving one person control over recording receivables and writing-off receivables.
Revenue is only recorded at the time the receivable is established. As payments are collected, they are applied against the receivable until the receivable is reduced to zero. A receivable must be recorded when a sale of goods or services is provided for fees and payment is not received immediately.
Generally, all sale transactions should be cash basis and payment received at the time of, or before, the sale of goods or services is provided. It differs from the cash basis in which income is recorded when cash is received and deposited. Accrual accounting requires the recording of income when earned and expenses when incurred. The University of Louisville (University) and its related organizations report income on the accrual basis of accounting in accordance with Government Accounting Standards Board (GASB) guidelines.
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