The Budgeting of Account Receivable
The Budgeting of Account Receivable
receivable
Ananda Riski Oktavianto - 195020207111078
Receivables Definition
• Account Receivables
It is the amounts that customers owe the company for normal credit purchases. Since accounts receivable are
generally collected within two months of the sale, they are considered a current asset.
• Notes Receivables
It is amounts owed to the company by customers or others who have signed formal promissory notes in
acknowledgment of their debts. Promissory notes strengthen a company’s legal claim against those who fail to pay as
promised.
• Other Receivables
Accounts receivable and notes receivable that result from company sales are called trade receivables, but there are
other types of receivables as well.
Benefits of Account Receivables
As is the case with other budgets, for the accounts receivable budget there is also no
standard form that must be used by the company. This means that each has the freedom to
determine the shape and format, according to the circumstances of their respective
companies. It is important to remember that the accounts receivable budget as a supporting
budget for the balance sheet (balance sheet supporting budget) must be sufficiently
systematic and detailed, so that it can function as a work guideline. , a work coordination
tool, and as a work evaluation (supervision) tool. As an illustration, here is an example of a
Budget Receivable, so that it can provide clearer steps.
The steps in preparing the accounts receivable budget include:
3.Step III: Calculate the net trade receivables (as well as the trade receivables budget)
General equation:
Total net receivables = Total trade receivables - allowance for uncollectible accounts receivable write-off