Account Receivable is simplydefined as the money to be paid to a company by the buyer whether he is anindividual or corporation for products and services delivered on credit and notyet paid for. Usually, accounts receivables are treated as that of a currentasset on a balance sheet. They do appearas operating lines of credit and are owed within a short period of time rangingfrom a few days to a year.
A scrupulous sale is dealt with like an accountreceivable following the invoice sent to the buyer. Similarly, accountsreceivables are documented as an asset on a balance sheet, since they denote aresponsibility over the buyer to remit cash for its short-term debts.Fortunately, Account Receivable come under no limitation to business . Thisenables every individual to have it. Individuals can get their receivables fromtheir companies either as a monthly or bi-weekly paycheck. Almost every company operates bysetting aside some fraction of their sales to be on credit. These types of saleare not practiced among new or strange customers where as practiced amongfrequent or special customers. Further, these customers are invoicedperiodically, there by are made free from physical disturbances that occurwhile making payments. Usually, this happens when a customer bestows a companyan IOU for freight or services previously received. If a company hasreceivables, this means it has made a sale but has yet to collect the moneyfrom the purchaser.
Accounts Receivable Ledger: An Accounts Receivable Ledger isthe documentation maintained regarding each customer\'s charges. This can alsobe doubled as a customer statement. Therefore, keeping an Accounts ReceivableLedger account for each and every customer will help you in recording the salein the sales and cash receipts journal during customers purchase. Moreover,the Account Receivable debit and credit columns provided in the journal willdo a lot in recording charge sales and payments on account in these twocolumns. The record then is posted to the particular customer\'s accounts in theledger at the end of each working day. This helps you to know the full amountpayable to the company by credit customers and also the full amount payable byeach customer. However, the details recorded regarding sales and cash receiptsjournal are totaled at the month end enabling the posting of results toaccounts receivable account in your general ledger. This process is shortlycalled as your accounts receivable "control account", where the wordcontrol refers to the completion of your posting. Even after this, the sum ofcustomer balances in the ledger will remain the same as the balance in thecontrol account in the general ledger . If not, you can assume error has beenmade somewhere. One-Write System: This is nothing but the system of combining accounts receivable ledgerswith the recording of sales and cash receipts transactions with the intent ofwidening credit to uphold sales and cash receipts journal. The system helps insaving your time and cutting down posting errors. Also, it is possible to postto the accounts receivable ledgers automatically by the help of a computerprogram. All you need to do is to have accounts receivable ledger account foreach and every buyer you extend credit to and then post your sales statementtaken from cash receipts journal to the customer ledgers at the end of eachday. Make sure that you post cash receipts on account to the relevant ledgersirrespective of the cash register or separate cash receipts book you use. It isadvisable to keep all your ledgers in a single binder. Similarly, using thecopies of the accounts receivable ledgers to serve as invoices you mail mayhelp you in reducing the paper work. Also, opening new ledger sheet every monthis the right method while considering it to mail them out as statements.
At thesame time, if you are sure that the ledger sheets will not double, then thereis no need for opening a new sheet every month. You can just maintain therecord by a permanent ledger for each customer running total of the customerbalance. AR Invoice Write-Off Process During the process, it is theduty of the supervisor to spot out, by account, all outstanding receivablesolder than 365 days and report to the respective account manager once a year.He in turn would evaluate the report and submit the list to the AccountReceivable supervisor making a note of those items which have been written off,by instigating a credit memo, or an explanation bringing in the reason for thereceivable not being written off.
Further, the system permits businesses to cancel Account Receivable whenever the organization decides the receivable is un collectible. In like circumstances, it is better for organizations to cancel uncollectible statements in the AR system. To make it possible, the accountmanager should start a credit memo to write off the receivable as soon as hedecides that a receivable is uncollectible.
A scrupulous sale is dealt with like an accountreceivable following the invoice sent to the buyer. Similarly, accountsreceivables are documented as an asset on a balance sheet, since they denote aresponsibility over the buyer to remit cash for its short-term debts.Fortunately, Account Receivable come under no limitation to business . Thisenables every individual to have it. Individuals can get their receivables fromtheir companies either as a monthly or bi-weekly paycheck. Almost every company operates bysetting aside some fraction of their sales to be on credit. These types of saleare not practiced among new or strange customers where as practiced amongfrequent or special customers. Further, these customers are invoicedperiodically, there by are made free from physical disturbances that occurwhile making payments. Usually, this happens when a customer bestows a companyan IOU for freight or services previously received. If a company hasreceivables, this means it has made a sale but has yet to collect the moneyfrom the purchaser.
Accounts Receivable Ledger: An Accounts Receivable Ledger isthe documentation maintained regarding each customer\'s charges. This can alsobe doubled as a customer statement. Therefore, keeping an Accounts ReceivableLedger account for each and every customer will help you in recording the salein the sales and cash receipts journal during customers purchase. Moreover,the Account Receivable debit and credit columns provided in the journal willdo a lot in recording charge sales and payments on account in these twocolumns. The record then is posted to the particular customer\'s accounts in theledger at the end of each working day. This helps you to know the full amountpayable to the company by credit customers and also the full amount payable byeach customer. However, the details recorded regarding sales and cash receiptsjournal are totaled at the month end enabling the posting of results toaccounts receivable account in your general ledger. This process is shortlycalled as your accounts receivable "control account", where the wordcontrol refers to the completion of your posting. Even after this, the sum ofcustomer balances in the ledger will remain the same as the balance in thecontrol account in the general ledger . If not, you can assume error has beenmade somewhere. One-Write System: This is nothing but the system of combining accounts receivable ledgerswith the recording of sales and cash receipts transactions with the intent ofwidening credit to uphold sales and cash receipts journal. The system helps insaving your time and cutting down posting errors. Also, it is possible to postto the accounts receivable ledgers automatically by the help of a computerprogram. All you need to do is to have accounts receivable ledger account foreach and every buyer you extend credit to and then post your sales statementtaken from cash receipts journal to the customer ledgers at the end of eachday. Make sure that you post cash receipts on account to the relevant ledgersirrespective of the cash register or separate cash receipts book you use. It isadvisable to keep all your ledgers in a single binder. Similarly, using thecopies of the accounts receivable ledgers to serve as invoices you mail mayhelp you in reducing the paper work. Also, opening new ledger sheet every monthis the right method while considering it to mail them out as statements.
At thesame time, if you are sure that the ledger sheets will not double, then thereis no need for opening a new sheet every month. You can just maintain therecord by a permanent ledger for each customer running total of the customerbalance. AR Invoice Write-Off Process During the process, it is theduty of the supervisor to spot out, by account, all outstanding receivablesolder than 365 days and report to the respective account manager once a year.He in turn would evaluate the report and submit the list to the AccountReceivable supervisor making a note of those items which have been written off,by instigating a credit memo, or an explanation bringing in the reason for thereceivable not being written off.
Further, the system permits businesses to cancel Account Receivable whenever the organization decides the receivable is un collectible. In like circumstances, it is better for organizations to cancel uncollectible statements in the AR system. To make it possible, the accountmanager should start a credit memo to write off the receivable as soon as hedecides that a receivable is uncollectible.
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