The Accounts Receivable Cycle: Provides a clear overview of the credit sales process, from receiving a customer order to issuing an invoice, tracking the debt, and finally receiving and recording the payment.
Source Documents for Credit: Detailed practice in identifying and processing the "paper trail" of credit transactions. This includes:
Tax Invoices: Recording sales made on credit.
Credit Notes: Handling returns or overcharges.
Receipts: Recording when customers pay their accounts.
Statements: Understanding the summary document sent to customers to prompt payment.
Subsidiary Ledgers vs. Control Accounts: A core technical skill for Level 2. Students learn to maintain individual Customer Ledger Accounts and understand how they reconcile with the Accounts Receivable Control Account in the General Ledger.
Aged Debtors Reports: Master the primary tool for credit control. Students learn how to categorize debts by age (Current, 30 Days, 60 Days, 90+ Days) to identify which customers need urgent follow-up.
Credit Control Policies: Investigates the strategies businesses use to minimize risk. This includes setting credit limits, offering prompt payment discounts, charging interest on overdue accounts, and the process of vetting new customers.
Managing Bad and Doubtful Debts: Practical exercises in the "darker side" of credit. Students learn the accounting entries for writing off a Bad Debt and the ethical and financial implications of creating an Allowance for Doubtful Debts.
The Impact on Cash Flow: Explores the relationship between sales and cash. Students learn that a sale is not "cash in the bank" until the debtor pays, highlighting the importance of the Cash Budget.
Internal Controls for Accounts Receivable: A focus for Merit and Excellence levels. Students analyze how to protect the business from fraud or error, such as the separation of duties (e.g., the person who records the sale shouldn't be the one who handles the cash).
Accounting for GST in Credit Sales: Comprehensive practice in calculating and recording GST on credit transactions and ensuring the correct amounts are reported to the IRD.
Achievement, Merit, and Excellence Scaffolding: Progresses from simple transaction recording to the "Excellence" level of evaluating a business's credit management system and recommending improvements to enhance liquidity.
Step-by-Step Worked Examples: Features "Process Maps" that show a transaction moving from a Tax Invoice into the Subsidiary Ledger and finally appearing on an Aged Debtors Report.
Full Answer Appendix: Provides all numerical solutions and completed ledger templates at the back of the book, allowing for independent study and immediate feedback.
Glossary of Credit Terms: A guide to essential vocabulary—such as Debtor, Default, Liquidity, Reconciliation, and Credit Worthiness—ensuring students use the correct professional terminology