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Which one of the approaches for the allowance procedure emphasizes the net realizable value of accounts receivable on the balance sheet?
A contra account to accounts receivable is typically the "allowance for doubtful accounts." This account is used to estimate and record the portion of accounts receivable that may not be collectible, reflecting potential bad debts. By maintaining this contra account, businesses can present a more accurate picture of their expected cash flows and financial position. It reduces the total accounts receivable balance on the balance sheet, providing a net receivable figure that is more realistic.
Describe the data which will be used to prepare the account receivable aging report
Accounts receivable refers to the money owed to a company by its customers for goods or services delivered but not yet paid for. It represents a line of credit extended by the company and is recorded as an asset on the balance sheet. Managing accounts receivable involves tracking outstanding invoices, ensuring timely payments, and maintaining customer relationships, which is crucial for maintaining cash flow and overall financial health.
the schedule of accounts receivable shows
the schedule of accounts receivable shows
Accounts receivable is money that a client owes to a company. The company bills the client detailing the cost and nature of the goods acquired or services rendered on the clients behalf. It is not, however, a term used to describe debts, which are called notes receivable.
the formula of calculating account receivable turnover = Net Sales/ average gross receivable
It is basically deducting the allowance for doubtful accounts from the total accounts receivable.
For calculating accounts receivable balance we need accounts receivable turnover rate So Accounts receivable turnover rate = number of days in year/annual sales outstanding accounts receivable turnover rate = 360/40 = 9 Accounts receivable balance = 7300000/9 Accounts receivable balance = 811111
Net Sales / Average Accounts Receivable = Account Receivable Turnover
Because accounts receivable is that amount which is receivable from customer due to sales of goods on credit.