Accounts Receivable

RECENT NEWS
The Hindu Business Line  Jan 22  Comment 
Farmers’ sentiment poor after facing four bad crop seasons in a row
The Hindu Business Line  Jan 12  Comment 
To partner with NSE and SIDBI for the initiative: Arundhati Bhattacharya
The Hindu Business Line  Jan 3  Comment 
I am 42 and am engaged in the stationery business. My wife is 38. We have a daughter aged 13. My retired father is dependent on me. I have supplied to companies and the receivables are pendi...
Motley Fool  Dec 20  Comment 
Breaking down an important component of the cash conversion cycle.
Forbes  Dec 9  Comment 
Factoring is an industry with a ton of customers and a bad reputation. Plenty of industries are seen as necessary evils—my own marketing and advertising is often painted as a pile of propagandists and liars. On our wall at Modo Modo Agency we...
The Hindu Business Line  Nov 25  Comment 
The structure will help improve flow of funds to micro, small and medium units
The Hindu Business Line  Nov 24  Comment 
Three entities including Axis Bank, Gurgaon-based Mynd Solutions and a joint bid by NSE Strategic Investment Corporation Limited and Small Industries Development Bank of India have been granted...
The Economic Times  Nov 24  Comment 
RBI on Tuesday granted an “in-principle” approval to three companies to set up and operate a new Trade Receivables Discounting System.




 
TOP CONTRIBUTORS

Accounts receivable are money owed to a business by its customers from goods or services sold that have not yet been paid for.

Accounts receivable (alternately "receivables") are created when a customer purchases goods or services from a company but does not pay for them at the time of purchase. Instead, the company issues an invoice for the goods or services at a later date, often at the end of the month. The amount due on the invoice is considered accounts receivable for the company. Receivables are treated as current assets on a company's balance sheet. Receivables are entered into a company's books when they receive an invoice for a good or service provision (and not before), as the invoice proves that money is legally owed to the company by an outside entity.

Receivables are typically issued by companies to reliable customers, since they are selling their goods on credit.

Examples

A car dealer buys five cars from Ford Motors but does not pay for the cars at the time of purchase. When Ford issues an invoice to the buyer, Ford also creates an accounts receivable entry on its balance sheet. The accounts receivable are settled once the dealer pays Ford in full for the cars.

For the car dealer, the invoice represents accounts payable, or money they have to pay to another company for already purchased goods or services. When the dealer pays Ford Motors, Ford then converts its accounts receivable to cash on its balance sheet.

Entry at the Time of Issue Invoice:

Car Dealer A/c Dr.

  To Sales A/c Cr.
Please install Flash Player to view this chart.
Please install Flash Player to view this chart.
Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki