Learning objectives (with links to notes for each objective below)

• LO7-01: Define what is meant by internal control and describe some key elements of an internal control system for cash receipts and disbursements.

• LO7-02: Explain the possible restrictions on cash and their implications for classification in the balance sheet.

• LO7-03: Distinguish between the gross and net methods of accounting for cash discounts.

• LO7-04: Describe the accounting treatment for merchandise returns.

• LO7-05: Describe the accounting treatment of anticipated uncollectible accounts receivable.

• LO7-06: Describe how to estimate the allowance for uncollectible accounts and introduce the CECL model.

• LO7-07: Describe the accounting treatment of notes receivable.

• LO7-08: Differentiate between the use of receivables in financing arrangements accounted for as a secured borrowing and those accounted for as a sale.

• LO7-09: Describe the variables that influence a company's investment in receivables and calculate the key ratios used by analysts to monitor the investment.