What is Accounts Receivable?
Accounts Receivable keeps records of debtors of the business. All the Cash that the business is entitled to receive from its customers is entered in Accounts receivable Along with their Names and other(Contact info, Customer Number) info. Accounts receivable is aged for recovery purpose by businesses. Bad and Doubtful debt expense is also calculated on the basis of the customer’s liquidity.
Accounts Receivable Control Account.
Account Receivable Control account, or Sales ledger control account is an accounting term. Used for a collective account of all the debtors, where all the transactions of account receivables are recorded collectively. The Basic rules are as same as any other debtor’s account. The control account shows the accumulated debtor balance in a single account. In the real world, a business has many customers, and a lot of them usually buy merchandise on credit. A control account is used to manage these debtors under one roof.
An account receivable control account is an asset in nature and is shown in the current asset side of the balance sheet. The following items are Debited or credited in the sales ledger control account.
- Balance b/f (Opening Balance)
- Credit sales ( Sales made on a credit basis)
- Interest ( Profit changed on the amount due)
- Dishounoured cheques ( Cheques not honored, Accepted, or paid by the bank )
- Cash/ Bank received ( Amount Received by the business
- Sales return ( Amount of goods received by Customers)
- Sales discount ( Cash Discount given to customers )
- Bad debts ( Impairment of debtors due to the bankruptcy of other
- Set-off ( Settlement Between Accounts Receivable and Accounts Payable)