Should the event arise that you consider a receivable uncollectable in full or in part, that is you consider that your customer considering the circumstances wont be able to pay what they owe, you either decide to write the receivable down in value to the amount they will be able to pay (that is you’re making an estimate) or off the balance sheet if you’ve determined that they cannot pay you anything. Continue reading
With your sales revenue, with your process over your company’s revenue and receivables it’s crucial you have routines in place on one hand and as a general rule, but it’s also important to have your everyday accounting entries in place. Continue reading
Revenue and receivables are your primary process when it comes to earning profits, earning resources to spend, to invest.
Something to note is that revenue is just this one stream on your income statement, it’s the stream of your income for the defined period and it arises from the sale of goods or services (whatever your company is in business of doing). There are other streams on your income statement which can be defined as expenses, but we’re not about to discuss those. Continue reading
Your sales prices are values you consider sufficient for a product or for a service to cover expenses made directly for the sellable unit and to also cover for those general expenses not related to production or providing the service (your company’s administrative, marketing and other expenses). Continue reading
So you’ve identified that a certain receivable balance is impaired and the collection of the outstanding amounts is unlikely. Once you’ve done that, you ought to write those receivables down in the sense that you’d recognize a provision within the accounts receivable group on the balance sheet to show the amount between what was initially recognized and what you expect to get instead. For an example, if the original amount was 200 CU and now you’d estimate that you’d only get half of it, your provision should be 100 CU. The net receivable is thus 100 CU on your balance sheet. Continue reading
Why have controls over revenues and receivables?
Your company’s revenues are what it makes in selling its services and goods and it’s what helps you cover expenses made. Recognizing revenue is one thing, but with it you’d also recognize a receivable and it’s what ensures you also get resources from what you earned. Continue reading
Normally, receivables on the statement of cash flows are treated as a part of cash flows from operating activities. I say “normally” since some receivables, those not related to the company’s business, should be part of investing activities. Continue reading