A huge part of your business, I\u2019d even say the main focus of your business, should be making sales happen. When it\u2019s the sales you\u2019re doing, you\u2019re also as a result of it, encountering accounts receivable balances. Yes, if you\u2019re selling and receiving money right away, you don\u2019t have receivables, but matter of fact is that most of the businesses nowadays do have receivables on their balance sheet.<\/p>\n
As I mentioned, if you\u2019re selling on spot and receive money right away, you won\u2019t have receivables. Why is that? It\u2019s the nature of the receivable really and it\u2019s already apparent from the name itself \u2013 receivable, i.e. something is to be received. This \u201csomething\u201d is money that you\u2019re about to receive at a determined date from your client, the party that got the goods or services the money is to be received for.\u00a0<\/p>\n
In accounting, after making a sale onto the income statement, the other side of your accounting entry should be debiting your receivables on the balance sheet. The entry should be something like this:<\/p>\n
Db Accounts receivable<\/i><\/p>\n
\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0\u00a0 Cr Sales revenue<\/i><\/p>\n
The above accounting entry shows that you made a sale, you gave away something and for this you will, at a later date, receive money. This receivable on the balance sheet obviously goes under assets because it\u2019s your right to receive some form of an asset, usually money.<\/p>\n
\u201cAccounts receivable\u201d are all those receivables combined. Consequently you need to keep a separate detailed ledger for all those balances that combine together into the accounts receivable on the balance sheet.<\/p>\n","protected":false},"excerpt":{"rendered":"
A huge part of your business, I\u2019d even say the main focus of your business, should be making sales happen. When it\u2019s the sales you\u2019re doing, you\u2019re also as a result of it, encountering accounts receivable balances. Yes, if you\u2019re selling and receiving money right away, you don\u2019t have receivables, but matter of fact is […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[25,69],"tags":[],"class_list":["post-4387","post","type-post","status-publish","format-standard","hentry","category-1-basic-accounting","category-1-17-accounts-receivable"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts\/4387","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/comments?post=4387"}],"version-history":[{"count":1,"href":"https:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts\/4387\/revisions"}],"predecessor-version":[{"id":4388,"href":"https:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts\/4387\/revisions\/4388"}],"wp:attachment":[{"href":"https:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/media?parent=4387"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/categories?post=4387"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/tags?post=4387"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}