Accounts Receivable Career Guide and Counseling

Question: Accounts Receivable...? how can lowering the amount in the accounts receivable effect owner's equity/ liabilities?

Answer: If your accounts receivable cannot be collected, i.e. you have to write them off, the loss will flow through the income statement and impact the owner's equity account via retained earnings.

Question: What is the accounting for Accounts Receivable Funding when purchasing a company? I Bought a Company in Jan 2007. I am funding the purchase from the Accounts Receivables, ie: I am Paying the previous owner out of the Future Accounts Receivable for One year. What would be the correct Debits and Credits for this type of ongoing transactions?

Answer: Would it be better to factor your A/R? This is done through Purchase orders and we pick the PO up and send cash minus our fees. Most of the time this is a nominal fee. Lets say for $10,000 purchase order -- when it is all said and done the fees are around $500.

Question: What causes an accounts receivable to rise and fall throughout the year? If a company has a very large accounts receivable, (34% of total current assets), What causes the account to rise and fall throughout the year?

Answer: Accounts receivable is what the company is currently owed by its customers who have not been billed yet or haven't paid their bills yet. Therefore accounts receivable could rise and fall throughout the year for various reasons: - If the company's business is seasonal (for example, landscaping or house painting) - If the company is losing or gaining customers for any reason (maybe due to an improving or worsening economy) - If the company has few customers, then each new customer or lost customer can cause a bigger change in accounts receivable than if there were many customers

Question: How do I post a payment to accounts receivable in my General Journal? So, If I receive a payment for a bill that's in accounts receivable, how do I post it? Is the Accounts receivable debited or credited? which would make the cash debited or credited?

Answer: Debit cash, credit A/R

Question: In Accountancy, is Bills receivable and Accounts receivable are the same? That means is it Bills Receivable and Accounts receivable are one and the same or it has different meanings to each other?

Answer: Hi, Let me describe in detail. For Example Mr. A has purchased some goods from Mr. B worth 500 $ and Mr. A has written a legal document (Called bill of exchange) on Mr. B that he will pay to him 500 $ on a particular date and Mr. B has accepted it. This document (i.e. Bill) is a Bill receivable for Mr. A and Bill Payable for Mr. B. Now on the other hand all the credit sales are not made only on behalf of bills of exchange, some amount of sales is without bills which are called Trade Debtors. Accounts Receivables is the total sum of Bills Receivables and Trade Debtors, I Think it has answered your questions. - Thanks

Question: Is the accounts receivable account the same as creditors control account? Hi there, i have to estimate the doubtful debts of a company, i have all the accounts at hand and know that i need to estimate the doubtful debts based on the accounts receivable figure. Is this account also commonly called the creditor control account? Thanks!

Answer: No, the 'Accounts Receivable' and 'Allowance for Doubtful Accounts' accounts are related to your sales and your debtors (people who owe you money). The creditor control account is related to your purchases and your creditors (people to whom you owe money).

Question: What is the net expected realizable value of the accounts receivable? After the accounts are adjusted and closed at the end of the fiscal year, Accounts Receivable has a balance of $450,000 and Allowance for Doubtful Accounts has a balance of $25,000. What is the net expected realizable value of the accounts receivable? A $25,000 B $425,000 C $450,000 D $455,000

Answer: $450,000-25,000=425,000

Question: Can somebody please explain how accounts receivable works? I am applying for a job with a company, and after the interview process I must take and pass a test about accounts receivable. Can somebody please give me a break down of how an accounts receivable department works? Thanks!

Answer: Accounts Receivable is handling payments from people who owe the company money. You have to record the invoices (billing) and deduct the payments received against the particular bills. Returns are treated as Credit Notes and deducted from the bills (money owed). The payments received are entered into Payments (ledger). Each day the payments received (from 1 or more customers) are lodged but must be recorded in the Lodgements Book and the total is the amount of the lodgement (deposit to bank). You have to make sure everything reconciles (payments equal amount due and lodgements (deposits) are equal to the payments received. Good luck with the interview!! ]

Question: What to put in an Accounts Receivable Report ? I need to make an Accounts Receivable Report for our monthly meeting. It already has the aging days and amount of the outstanding invoices. What else can I put ? What does management what to know ? And is there any website that I can use for a reference ? Thank you.

Answer: Well, you might want to have a more detailed version of the aging at least by customer, this way they know which customer to focus on. List of issues pertaining to specific customer/ invoice/ segment/ product line that you can raise during the meeting, especially with those who can help solving it (account manager etc). The collection trend for each customer for the last 1 year by month, this will give a feel whether a customer is actually improving/ deteriorating in making payment to you. Cheers...

Question: How do you treat 3,000 increase in accounts receivable during month on a Cash Budget???? Im working on a cash budget. Among other items there is a $3,000 decrease in accounts receivable during the month. How do I treat this? I need help!!!!!!!!

Answer: Accounts receivable is cash you are waiting to receive. If accounts receivable have decreased, that means you have collected $3,000 worth of accounts receivable. This means your cash has increased $3,000. Hope this helps!