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Yes, it is a financial asset.
Accounts recievable are an asset, but Accountants use double entry accounting. This would involve providing a service before you are paid. You would increase the equity revenue account and the accounts recievable. When the money is paid a decrease in recievables will occur and the cash asset account will increase.
An AR is an asset and it's when you provide either a service or a good before receiving payment. However, I have to disagree with the fact that he states you would "increase" your equity revenue account because you have not actually received any "money" to increase your revenue account. By doing so you are claiming to have an income (revenue) that you haven't actually received yet.
This can cause problems further down the line, when closing the books, if you haven't received that payment as of yet, you will be showing an increase in revenue that you haven't actually received, you will be paying taxes on money that you haven't received.
Usually a Debit to the AR and a Credit to Inventory (or whatever account applies to show the sale). Once cash is received then a Debit to the Cash account and a Credit to the Revenue account will occur.
Wiki User
∙ 11y ago
Wiki User
∙ 11y agoNo not really it's an account that is used to report income payments received immediately. It's just a listing account prime use record income for tax purposes
Unless a company issues rights of income as to raise capital from a loan, bond or other venues. It's normally not done as a investment option as it endangers full access of immediate earnings for the business.
It can be done but it also requires certain reporting vehicles to show off-set of income for tax purposes. Most companies don't do this as it creates additional expense in reporting and may not be favorable in tax reporting.
I've seen as a last ditch effort in emergency capital revenue for hard press businesses - and usually require pre- notification the the IRS and other tax reporting agencies. Mostly it's not done as it raises suspicion as a vehicle to hide income generation for a business. (if done audits are highly likely). The allowance is rare and sometimes more seen in other foreign investment options. Were rulings are more laxed).
Note also seen when done in foreign investments as is a systemic problem that contributes to funds imbezzled too....
Wiki User
∙ 14y agoYes! The definition states all transactiones arrising from cash transactions, the investment of cash and the extention of credit are short-term financial assets>
Needles & Powers 2004
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What is the asset-offset of an accounts receivable?
Yes. Accounts receivable, or receivables for short, represent a financial obligation to the organization and are represented on the asset side of the balance sheet.Generally yes, most of your accounts receivable will be listed as a current asset. To make sure however remember the rule of current assets. Current assets are anything that can be turned into "cash.Accounts receivable is considered a short term asset.
Are accounts receivable assets or liabilities?
Asset. It is cash that you are owed. Accounts receivable is considered a short term asset.
Is accounts receivables considered an asset?
Yes. Accounts receivable, or receivables for short, represent a financial obligation to the organization and are represented on the asset side of the balance sheet.
What is the meaning of pledged receivables?
Pledged accounts receivable, also known as accounts receivable financing, is a type of secured short-term loan whereby the debt is recorded in the financial institution's accounts receivables account.
What type of asset is accounts receivable?
Accounts have 3 types of accounts those are : Real, Nominal, Personal. Nominal accounts are those accounts which deals in income and expenses. Real accounts deals in accounts like cash, accounts recievable etc. Personal accounts deals in accounts of people like Mr.Sam account. So Account Recievable is Real account. ---- In financial accounting, accounts receivable is not a "cost" at all. Accounts receivable is an account that records money owed to a company by a customer. This account is recorded under the "current asset" accounts on the Balance Sheet.
What is the purpose and scope of accounts receivable?
Account recievable is a account that records the amount should be received . Accounts receivable are the short-term financial assets of a wholesaler or retailer that arise from sales on credit
Is interest receivable a long term or short term asset?
Interest receivable is normally a current asset as interest are normally collected within one fiscal year.
How does Business asset financing work?
Business Asset finance uses a company's cash balance sheet assets, such as short-term investment, inventory, and accounts receivable, to obtain money or an advance loan. The business borrowing the money must give the lender an interest as security on the asset.
What is meant by the term 'accounts receivable'?
Money owed by customers to an entity in exchange for goods & services provided or delivered but not yet paid for. These payments are usually due within a relatively short time period ranging from a few days up to a year. Accounts receivable is often recorded as an asset because this represents a legal obligation for the customer to remit cash for short-term debts.
Is inventory a short term financial asset?
yes
What is difference between fixed asset and non current asset?
Current asset appears first in the balance sheet such as cash, accounts receivable and inventory. Fixed assets are those such as land, buildings, vehicles, furnitures, office equipments. In short, fixed assets are also known as non-current asset. It can also be known as capital assets or plant, property and equipment.
Accounts receivable and its effects in financial accounting?
Expected future cash receipt(s) arising from permitting a customer to buy now and pay later, small balance with short term to maturity.
