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    Accounts Payable V - S Accounts Receivable

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    saloni1999jain
    The document discusses how the accrual method of accounting follows the double-entry method by recording journal entries for expenses and income when they occur regardless of cash payments or receipts. It also discusses how accounts receivables are recorded when goods or services are delivered but payment is not yet received, and how companies monitor accounts receivables to ensure timely payment.

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    Accounts Payable V - S Accounts Receivable

    Uploaded by

    saloni1999jain
    2 views1 page
    The document discusses how the accrual method of accounting follows the double-entry method by recording journal entries for expenses and income when they occur regardless of cash payments or receipts. It also discusses how accounts receivables are recorded when goods or services are delivered but payment is not yet received, and how companies monitor accounts receivables to ensure timely payment.

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    Accounts Payable V_s Accounts Receivable[1]

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    The document discusses how the accrual method of accounting follows the double-entry method by recording journal entries for expenses and income when they occur regardless of cash payments or receipts. It also discusses how accounts receivables are recorded when goods or services are delivered but payment is not yet received, and how companies monitor accounts receivables to ensure timely payment.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    2 views1 page

    Accounts Payable V - S Accounts Receivable

    Uploaded by

    saloni1999jain
    The document discusses how the accrual method of accounting follows the double-entry method by recording journal entries for expenses and income when they occur regardless of cash payments or receipts. It also discusses how accounts receivables are recorded when goods or services are delivered but payment is not yet received, and how companies monitor accounts receivables to ensure timely payment.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 1

    Introduction-

    The accrual method follows the double-entry accounting method. The principal records a journal
    entry for every expense and income when it occurs, irrespective of the cash payment received
    or paid. The same is also reflected in the company's balance sheet under the ledgers termed as
    accounts payable and accounts receivable.

    This is done to ensure that the company's financial statements reflect its true position for its
    stakeholders.

    How to record Accounts Receivables?

    Accounts receivables are generated when the services or goods are delivered to the customer
    and payment is due.

    Accounts receivables are short-term in nature and are termed current assets. They reflect a
    debit balance in the statements. The company records this on the asset side of the balance
    sheet.

    Companies keep tabs on the aging of these due customer payments to ensure they are
    received on time. Fundamental analysts look at the accounts receivables by verifying the
    accounts receivable to their turnover ratio. This helps understand the capacity of the company
    to collect the receivables in an accounting year.

    If customers don't pay their dues on time, they are written off from the company accounts and
    accounted as bad debts in the financial statements.

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