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Revenue and receivables

Revenue and receivables

In most companies, what motivates the balance sales and costs. In other words, they cause the assets and liabilities in a company. One of the more complicated issues of accounting are debtors. As a hypothetical situation, imagine a company that offers all its customers a period of 30 days credit, which is quite common in transactions between businesses, (not transactions between a company and individual consumers).

Asset accounts receivable shows how much money customers who have purchased products of credit for always the company. It is a promise of case that the company will receive. In short, accounts receivable is the amount of revenue not collected the sale at the end of the reporting period. Cash not to increase the company actually this money clients corporate collect. However, the amount of money in accounts receivable is included in the total revenues from sales for the same period. The company made the sale, even if it is all the money from the sale has not yet acquired. The proceeds of the sale, then is not equal to the amount of money that the company is collected.

Real liquidity, the auditor must subtract the amount of the credit sale will not be collected from the proceeds of the sale for cash. Then add money that have been collected for credit sales that have been created in the previous period. If the amount of the sale of credit a company created during the reporting period is greater than what was collected from customers, then the account debtor has increased and the company has a net income of you who want to subtract the difference.

If the amount it collected during the reporting period more from the sale of credit, then the debtor during the reporting period fell and the accountant should be added to the net difference between claims on the beginning of the reporting period and the progress made at the end of the same period.

Revenue and receivables - Internet Business Online News


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