03-18-2009, 06:20 PM
1- What should be the treatment of L/Cs and L/Gs in the books of account?
L/c's and L/Gs would be treated as commitments without transaction in the books of accounts. Letters of credits / guarantees forms level of guarantees.
2- In case we receive âPost dated checkâ from the customers, can we reduce our receivables at this point of time?
One can not reduce one's receiveables /payable on issuance of "post dated check", It will remain receivables / payable till the date mentioned on the check.
2- In case of L/C, when the Bank issues âAcceptance Adviceâ (an irrevocable commitment) that this will be the maturity date of our L/C, but sometimes it takes one or two days for the money to be actually credited in the bank, can we reduce our receivables as at the maturity date of the L/C and not waiting for the money to be actually credited in bank (on the basis of bank acceptance advice).
can not reduce receivables as at the maturity date of the L/C and wait for the money to be actually credited in bank i.e reduce on the basis of credit advice).
See "Occurance" and "Revenue Recognition"
L/c's and L/Gs would be treated as commitments without transaction in the books of accounts. Letters of credits / guarantees forms level of guarantees.
2- In case we receive âPost dated checkâ from the customers, can we reduce our receivables at this point of time?
One can not reduce one's receiveables /payable on issuance of "post dated check", It will remain receivables / payable till the date mentioned on the check.
2- In case of L/C, when the Bank issues âAcceptance Adviceâ (an irrevocable commitment) that this will be the maturity date of our L/C, but sometimes it takes one or two days for the money to be actually credited in the bank, can we reduce our receivables as at the maturity date of the L/C and not waiting for the money to be actually credited in bank (on the basis of bank acceptance advice).
can not reduce receivables as at the maturity date of the L/C and wait for the money to be actually credited in bank i.e reduce on the basis of credit advice).
See "Occurance" and "Revenue Recognition"