Accounts receivable

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The Economist  Sep 15  Comment 
PEOPLE respond to incentives. When bankers at Wells Fargo were paid to sign customers up for more and more products, that’s exactly what they did. To a fault. Over around five years, starting in 2011, up to 1.5m deposit accounts and 565,000...
The Economic Times  Sep 14  Comment 
Assets include plants and machinery , inventories, properties, cash, any receivables. Liabilities include borrowings, amount payable for services received or tax.
The Economic Times  Sep 14  Comment 
A look at the track record of past few years — trend in revenues, profit margins, debt and receivables — helps to assess how well the business has been run.
OilVoice  Aug 12  Comment 
In its Consolidated Financial Statements for the year ended 31 December 2015 released on 5 April 2016 the Company referred to the outstanding trade receivable owed by Joint Stock Company Sevmorgeo
The Economic Times  Jun 24  Comment 
The company’s shares were down 5 per cent in Friday afternoon trade, as traders factored in the potential impact of Brexit on the company.
Mondo Visione  Jun 16  Comment 
The Alberta Securities Commission (ASC) has concluded Settlement Agreements with Poseidon Concepts senior executives Lyle Dennis Michaluk, Matthew Cory MacKenzie and Clifford Leroy Wiebe in which they admit to breaching Alberta securities laws...
Insurance Journal  Jun 16  Comment 
Allied World Assurance Company Holdings, AG has launched its Accounts Receivable Insurance in the United States and Canada. The coverage is designed to assist CFOs and senior financial executives with mitigating the risk of non-payment due to...
Motley Fool  May 13  Comment 
Three simple steps to determining the interest liability on a loan note.
Benzinga  Apr 27  Comment 
AES Corp (NYSE: AES) revealed that one of its subsidiaries, AES 3C Maritza East I (Maritza) in Bulgaria, received $350 million as outstanding receivables from NEK, the state-owned wholesale power company. According to the company, the payment was...
Benzinga  Apr 22  Comment 
Synchrony Financial (NYSE: SYF) reported net income of $582 million for the first quarter, up 5.4 percent from $552 million in the previous year quarter. Its earnings also grew 6.1 percent to $0.70 a share from $0.66 a share in the same quarter...




 
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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.
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