If a receivable is greater than ninety days due at the end of the reporting period, it is considered non- admitted even if it is collected prior to the issuance of the financial statements.

Question

Options

• ATrue
• BFalse

• A
  75% (40)
• B
  25% (13)

Explanation

Option A is correct because under Statutory Accounting Principles (SAP), the admissibility of a receivable is determined by its status at the end of the reporting period, not by events occurring afterward. If a receivable exceeds 90 days past due at the balance sheet date, it must be classified as non-admitted - period. This is a strict, date-driven rule with no exception for subsequent collection.

Option B is wrong because it implies that collecting the receivable before the financial statements are issued "cures" the non-admitted classification. SAP deliberately rejects this logic - subsequent events do not retroactively change asset admissibility, which is what distinguishes SAP from GAAP (which does allow certain subsequent events to affect recognition).

Memory tip: Think of the 90-day rule as a snapshot, not a movie. SAP takes a photo of the receivable on the reporting date - if it's overdue by more than 90 days in that photo, no amount of future action can change what the camera captured.

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