Accounts Receivable
Accounts receivable (AR) are the balance of money due to a firm for goods or services delivered or used but not yet paid for by customers. Accounts receivable are listed on the balance sheet as a current asset. Any amount of money owed by customers for purchases made on credit is AR.
Definition: Accounts receivable refers to the balance of goods or services delivered or used by a company to customers, but the amount has not yet been paid by the customers. Accounts receivable is listed as a current asset on the balance sheet. Any amount owed by customers for purchasing goods on credit is considered accounts receivable.
Origin: The concept of accounts receivable can be traced back to ancient commercial activities when merchants conducted transactions on credit. As business activities became more complex and expanded in scale, accounts receivable gradually became an important part of corporate financial management. The establishment of modern accounting systems further standardized the recording and management of accounts receivable.
Categories and Characteristics: Accounts receivable can be classified based on different criteria. By aging, it can be divided into aging analysis such as within 30 days, 30-60 days, 60-90 days, and over 90 days. By customer type, it can be divided into corporate customer accounts receivable and individual customer accounts receivable. The main characteristics of accounts receivable include: 1. High liquidity, usually collected within a year; 2. Certain credit risk, with the possibility of bad debts; 3. Crucial for the company's cash flow management.
Specific Cases: Case 1: A manufacturing company provides goods worth 100,000 yuan to a retailer, agreeing to pay within 60 days. This 100,000 yuan is the manufacturing company's accounts receivable. Case 2: A software company provides a one-year software service to a customer for 50,000 yuan, with the customer agreeing to pay within 30 days after the service starts. This 50,000 yuan is also the software company's accounts receivable.
Common Questions: 1. How to conduct aging analysis of accounts receivable? Answer: Aging analysis involves classifying accounts receivable by time periods to assess the likelihood of collection. 2. How to manage the credit risk of accounts receivable? Answer: Credit risk can be managed through customer credit evaluation, setting credit limits and terms, and regular collection efforts.
