Division of Financial Services
Accounting
Sometimes in a revenue transaction, a unit provides a good or a service and permits the customer to defer payment to a future date. In this scenario, when revenue is earned but payment is not yet received, an account receivable (A/R) should be recorded and managed. Accounts receivable are considered assets, because they represent a future resource (usually cash) to the university. Proper stewardship of A/R, like any asset of the university, is an expectation of the unit and the responsible employee.
The typical entry to record this activity is:
DR Accounts Receivable
CR Revenue
The following are the most common A/R object codes used by departments:
| Object Code | Object Code Name | Description |
|---|---|---|
| 1200 | Accounts Receivable | A current asset representing an amount due Cornell resulting from the sale of goods or services. Use: Any department where goods and services are invoiced. |
| 1280 | Interdept - Accounts Receivable | An asset created from sales activity between Cornell departments. An interdepartmental income code must be used on the other side of the transaction. Use: Used by departments to record income when the customer’s account can't be charged an expense due to the period end (month or year). |
| 1300 | Accounts Receivable - Contract Grant | A current asset representing an amount due Cornell as a result of invoicing contract and grant agreements or federal appropriations. Use: Restricted for DFS use only. |
When payments for outstanding A/R are received, do not record revenue again! Instead, record the cash received and reduce the receivable using an Advance Deposit (AD) e-doc.
DR Cash (system generated entry on object code 1000)
CR Accounts Receivable
When a unit uses subsidiary systems to manage revenue transactions, customers, and billing, the system should provide the data necessarily to record the revenue (and associated receivable) as it is earned. When it is a manual process, revenue earned during the month should be recorded monthly, at a minimum, with unpaid amounts recorded as receivables. At fiscal year-end, every unit should analyze revenue earned during that fiscal year, and record a receivable for any amounts not yet collected.
Units are responsible for reconciling their accounts receivable on a monthly basis, if revenue generating activities are occurring on a monthly basis. The unit should be able to produce the itemized details (invoices or customer account balances) that reconcile to the total reflected in the general ledger.
For additional guidance related to reconciliations, see Reconciliation Guidelines.
See also: Accounts Receivable
