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It's split up into different income statment lines. (Applies to all receivables the company has created during the financial year only).

1. Sales Revenue (nearly all your AR goes here or should I say the ones you reckon will pay!!)

2. Bad debt or irrecoverable debt & allowance for receivables (expense). I.e. This line comprises of written off receivables that dont pay + Specific Allowance (specific people you think wont pay) + Movement in General Allowance (a small pot of money reserved for people who dont pay - aka the unknown people). Add them up and you have the "charge for irrecoverable debts).

Basically dont think of AR as line line that goes into the I/S. Think of it as a shopping list with your good stuff (sales rev, veg) and bad stuff (bad debt, choc) and the stuff your not sure is good or bad...but to be safe you call it bad (allowances, pork scatchings).

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16y ago

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