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Processes 65

As in the case of the AP reconciliation account, the AR reconciliation account
does not track the details of the transactions. When payment is made (Steps
3–4), the bank account is debited, and the appropriate customer account is
credited. At the same time, a corresponding automatic credit is posted to the
reconciliation account, accounts receivable reconciliation.

Figure 3-16: Accounts receivable accounting

Demo 3.6: Review reconciliation and non-reconciliation
AR accounts

ASSET ACCOUNTING

An organization may possess a variety of assets, including tangible, intan-
gible, and fi nancial assets. Tangible assets have a physical form, whereas
intangible assets are nonphysical. Examples of tangible assets are computers,
machinery, and buildings. Examples of intangible assets are intellectual prop-
erty, patents, and trademarks. Financial assets include a variety of fi nancial
instruments such as securities, long-term notes (debts), and mortgages.

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