The debit entry to a contra account has the opposite effect as it would to a normal account. The debit amount recorded by the brokerage in an investor’s account represents the cash cost of the transaction to the investor. Sal records a credit entry to his Loans Payable account (a liability) for $3,000 and debits his Cash account for the same amount. ...

You should periodically evaluate the individual items recorded in the non trade receivables account to see if the company is still likely to receive full payment. If not, reduce the amount in the account to the level you expect to receive, and charge the difference to expense in the period in which you make this determination. This evaluation should be conducted as part of the peri...

The idea of an arm’s length transaction relates to an agreement between two people or entities that are independent of one another. This means that they do not have a prior relationship with one another, such as being related to each other, having a prior deal with each other, or that one party controls the other in some way. They worry that parties to a non-arm’s length transac...