Skip to main content

9.6 Identify and Account for Other Types of Receivables

Types of Receivables​

Besides accounts receivable, businesses may have other types of receivables:

  1. Notes Receivable (covered in next section)
  2. Other Receivables
  3. Advances to Employees
  4. Tax Refunds Receivable
  5. Interest Receivable

Other Receivables​

Other Receivables include various amounts owed to the business that aren't trade receivables.

Examples:

  • Insurance claims
  • Tax refunds
  • Deposits with suppliers
  • Advances to employees
  • Miscellaneous receivables

PCN Account:

  • 420000: Other Receivables (Class 4)

Example: Insurance Claim:

420000 Other Receivables          €2,000
[Appropriate Account]                          €2,000
To record insurance claim receivable

Advances to Employees​

Employee Advances:

  • Money advanced to employees
  • Usually repaid through payroll deduction
  • Current asset

PCN Account:

  • 421000: Advances to Employees (Class 4)

Example:

  • Advance €500 to employee

Journal Entry:

421000 Advances to Employees      €500
510000 Cash                                    €500
To record advance to employee

Repayment:

620000 Salaries Expense           €2,000
421000 Advances to Employees                   €500
510000 Cash (or 440000 Salaries Payable)      €1,500
To record salary payment with advance deduction

Tax Refunds Receivable​

Tax Refunds:

  • Overpayment of taxes
  • Refund expected from tax authorities
  • Current asset

PCN Account:

  • 422000: Tax Refunds Receivable (Class 4)

Example:

  • VAT refund of €1,000 expected

Journal Entry:

422000 Tax Refunds Receivable     €1,000
431000 VAT Recoverable (or 430000 VAT Payable) €1,000
To record expected VAT refund

When Received:

510000 Cash                        €1,000
422000 Tax Refunds Receivable                  €1,000
To record receipt of tax refund

Interest Receivable​

Interest Receivable:

  • Interest earned but not yet received
  • Usually on notes receivable or investments
  • Current asset

PCN Account:

  • 423000: Interest Receivable (Class 4)

Example:

  • Interest of €100 earned but not received

Journal Entry:

423000 Interest Receivable        €100
730000 Interest Income                        €100
To accrue interest income

When Received:

510000 Cash                        €100
423000 Interest Receivable                    €100
To record receipt of interest

Luxembourg Compliance Note​

Other receivables in Luxembourg:

  • Must be properly classified (PCN Class 4)
  • Must be valued appropriately
  • Must be collectible
  • Must maintain proper documentation
  • May affect tax calculations

Think It Through​

Why is it important to classify different types of receivables separately? How does this help with financial reporting and management?