Ken’s question
Thank you for the article regarding financial soundness. Are fees/commissions due, but not yet received, construed as an asset?
As you know, most institutions pay during the month following the receipt and final processing of new business.
In our accounting system, we create an invoice in respect of the specific institution/ transaction immediately upon the submission of the business. This applies especially with investments when the funds have already been deposited into the institutions bank account.
Your clarification will be appreciated.
Allan’s response
Accounts receivable, or trade receivables, are considered to be current assets of the business. These are usually – where appropriate – adjusted by deducting an allowance for doubtful accounts.
The fact that VAT is payable on receivable accounts also confirms that they are regarded as assets in the business.
In case you missed Allan Holton’s very informative article, you can read it here
