Accounts receivable

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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...
The Economic Times  Apr 22  Comment 
Securitisation is a process of pooling various types of loan receivables and selling their related cash flows to third party investors as securities.
Forbes  Apr 10  Comment 
If you?re juggling the duties of bookkeeping, while trying to focus on sales, you may be doing the bare minimum with accounting. You may not even have a strategy for managing receivables. Get one.
The Economic Times  Mar 20  Comment 
Its operating margins have improved as the company has started restricting its exposures to client accounts with higher receivables period.




 
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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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