Question

State some classes of transactions that comprise the sale and collection cycle.

Answer 1

The sales and collection cycle refers to collecting various accounts receivables, revenues, and financial receipts.

• The various transactions comprising the sale and collection cycle. include -

1) Sales - It affects the sales and accounts receivable.

2) Cash receipts - They consider the total cash and the accounts receivable.

3) Sales returns and allowances - It takes into consideration the sales returns and allowances and accounts receivable.

4) Charge-offs - They take into account the accounts receivable and the allowance for uncollectible accounts  

5) Bad debt expense - It takes into account the bad debt expense and the allowance for accounts that are uncollectible