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  • The Budgeting of Account Receivable

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    Ananda Riski
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    The document discusses accounting for accounts receivable. It defines accounts receivable, notes receivable, and other receivables. It notes that accounts receivable are amounts owed by customers for credit purchases and are considered a current asset. Notes receivables are formal debt acknowledgements. The document also discusses benefits of accounts receivable like increased sales and trade relations. It describes factors that affect accounts receivable like credit terms and standards. Finally, it outlines the steps to prepare a budget for accounts receivable, including calculating receivables, allowance for uncollectibles, and net trade receivables.

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    The budgeting of account receivable

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    The document discusses accounting for accounts receivable. It defines accounts receivable, notes receivable, and other receivables. It notes that accounts receivable are amounts owed by customers for credit purchases and are considered a current asset. Notes receivables are formal debt acknowledgements. The document also discusses benefits of accounts receivable like increased sales and trade relations. It describes factors that affect accounts receivable like credit terms and standards. Finally, it outlines the steps to prepare a budget for accounts receivable, including calculating receivables, allowance for uncollectibles, and net trade receivables.

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    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
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    Download as pptx, pdf, or txt
    141 views7 pages

    The Budgeting of Account Receivable

    Uploaded by

    Ananda Riski
    The document discusses accounting for accounts receivable. It defines accounts receivable, notes receivable, and other receivables. It notes that accounts receivable are amounts owed by customers for credit purchases and are considered a current asset. Notes receivables are formal debt acknowledgements. The document also discusses benefits of accounts receivable like increased sales and trade relations. It describes factors that affect accounts receivable like credit terms and standards. Finally, it outlines the steps to prepare a budget for accounts receivable, including calculating receivables, allowance for uncollectibles, and net trade receivables.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as pptx, pdf, or txt
    of 7

    The budgeting of account

    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

    • It is an effort to increase sales turnover, so that profits can also be


    increased.
    • In certain types of business, long-term credit can create certain
    benefits for the company.
    • Can strengthen trade relations between the company and its
    relations.
    Factors That Affects Account Receivables

    • Volume of goods sold on credit


    When the volumes of goods that are sold on credit is bigger than
    cash, it can makes the account receivable bigger and so forth.
    • Credit standard
    The determination of credit standard affects the size of account
    receivables.
    Factors Affecting Budget Accounts Receivable

    • The volume of goods sold on credit


    • Credit standards
    • Term of credit
    • Giving deductions
    • Credit restrictions
    • Accounts receivable collection policy
    Preparation of Accounts Receivable Budget

    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:

    1. Step I: Calculate the amount of accounts receivable

    2. Step II: Calculate the allowance for uncollectible accounts receivable

    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

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