21⟩ How important does Accounts receivable for small business and why?
Accounts Receivables help small businesses by providing short-term liquidity. Also continued sales on credit provide the much needed continuity for small businesses.
“Accounts Receivable Interview Questions and Answers will guide us now that Accounts Receivable is typically executed by generating an invoice and either mailing or electronically delivering it to the customer, who, in turn, must pay it within an established timeframe, called credit terms or payment terms. Accounts Receivable departments use the sales ledger. So learn the Accounts Receivable concepts with this Accounts Receivable Interview Questions Answers guide and get job preparation”
Accounts Receivables help small businesses by providing short-term liquidity. Also continued sales on credit provide the much needed continuity for small businesses.
As sales occurs every customer is not able to pay the bills that's where A/R are occurs the goal of A/R is to maintain summarize & record all the transactions related to unpaid a/c or future collections or A/R.
BRS - Bank Reconciliation Statement
A bank reconciliation statement is a statement prepared by organizations to reconcile the balance of cash at bank in a company's own records with the bank statement on a particular date.
The differences may arise because of the following reasons:
► Cheques deposited into bank but not yet collected by bank
► Cheques issued by the organization but not yet presented for payment
► Cheques directly deposited by customers into the bank
► Bank charges debited by bank
► Interest credited or some receipts directly collected by bank based on org. request.
► Some payments directly made by bank based on the organizations request.
So, the statement shows the reasons as what are the reasons for difference in balance.
One of the basic convention in accounting is separate legal entity.It means the business is different from those who manage it.When i contribute capital in to my business,it is liability to my business to repay it to me.
Derivative instrument is an asset which derives ie, takes its origin from another asset.
The simplest form of derivative is a forward contract, "It is an agreement to buy or sell an asset at a certain future time for a certain price"Other forms of of derivatives include futures,options and swaps, etc.
Its depends on the credit period of the company i.e. A company credit period 30 days 85 of the debtors collection should be recovered with in credit period. we can say the Effective collection.
It is money receivable from sundry debtors for sales made or services rendered.
It is an expenditure the benefit of which will be realised over a period and not during the current period.Ex-Heavy Advertisement expenditure incurred by the company for promoting the product.The benefits of this huge expenditure will be realised over the period and not in the same period when it is incurred.
By posting following entry
Customer Deposit A/c Dr (with Remaining amount)
To Cash or Bank A/c (with Remaining amount)
ERS is a business process between trading partners that conduct commerce without invoices. In an ERS transaction the supplier ships goods based upon an Advance Shipping Notice (ASN) and the purchaser upon receipt confirms the existence of a corresponding purchase order or contract verifies the identity and quantity of the goods and then pays the supplier.
Flow of Accounts receivable should be in proportion to Accounts payable i.e. in terms of ration 2:1
The next step would be adjusting receipt from customer against the customer outstanding with sale and to clear the customer account.
After 90 days of the due date.