receivables

(noun)

All the debts owed to a company by its debtors or customers.

Related Terms

Examples of receivables in the following topics:

  • Types of Receivables

    • Receivables can generally be classified as accounts receivables or notes receivable, though there are other types of receivables as well.
    • Receivables can be classified as accounts receivables, notes receivable and other receivables ( loans, settlement amounts due for non-current asset sales, rent receivable, term deposits).
    • Other receivables can be divided according to whether they are expected to be received within the current accounting period or 12 months (current receivables), or received greater than 12 months ( non-current receivables).
    • Accounts receivable and notes receivable that result from company sales are called trade receivables, but there are other types of receivables as well.
    • If significant, these nontrade receivables are usually listed in separate categories on the balance sheet because each type of nontrade receivable has distinct risk factors and liquidity characteristics.

  • Classifying Receivables

    • Receivables can be classified as accounts receivables, trade debtors, bills receivable, and other receivables.
    • On a company's balance sheet, receivables can be classified as accounts receivables or trade debtors, bills receivable, and other receivables (loans, settlement amounts due for non-current asset sales, rent receivables, term deposits).
    • Trade receivables are the receivables owed by the company's customers.
    • Other receivables can be divided according to whether they are expected to be received within the current accounting period or 12 months (current receivables), or received greater than 12 months (non-current receivables) .
    • Distinguish between accounts receivable, trade debtors, bills receivables and other receivables

  • Using the Receivables Turnover Ratio

    • The receivables turnover ratio measures how efficiently a firm uses its assets.
    • The receivables turnover ratio, also called the debtor's turnover ratio, is an accounting measure used to measure how effective a company is in extending credit as well as collecting debts.
    • The receivables turnover ratio is an activity ratio, measuring how efficiently a firm uses its assets.
    • Sometimes the receivables turnover ratio is expressed as the "days' sales in receivables":
    • $\dfrac{\text{Trade receivables}}{\text{Credit sales} \cdot 365} = \text{Average collection period in days}$

  • Valuing Accounts Receivable

    • Receivables of all types are normally reported at their net realizable value, which is the amount the company expects to receive in cash.
    • Receivables of all types are normally reported on the balance sheet at their net realizable value, which is the amount the company expects to receive in cash .
    • Business owners know that some customers who receive credit will never pay their account balances.
    • Accounts receivable is a control account that must have the same balance as the combined balance of every individual account in the accounts receivable subsidiary ledger.
    • Differentiate between the direct write-off method and the allowance method of accounts receivable valuation

  • What Is a Receivable?

    • A receivable is money owed to a business by its clients and shown on its balance sheet as an asset.
    • Accounts receivable is an asset which is the result of accrual accounting.
    • The accounts receivable departments use the sales ledger.
    • The accounts receivable team is in charge of receiving funds on behalf of a company and applying it towards their current pending balances.
    • Collections and cashiering teams are part of the accounts receivable department.

  • Recognizing Notes Receivable

    • In accounting, notes receivables are accounts to keep track of accrued assets that have been earned but not yet received.
    • In accounting, notes receivables are accounts to keep track of accrued assets that have been earned but not yet received.
    • Accrued assets are assets, such as interest receivable or accounts receivable, that have not been recorded by the end of an accounting period.
    • The ending balance on the trial balance sheet for accounts receivable is usually a debit.
    • Companies have two methods available to them for measuring the net value of accounts receivable, which is generally computed by subtracting the balance of an allowance account from the accounts receivable account.

  • Activities to Manage Receivables

    • Accounts receivable (or debtors) represent money owed to a business by its clients (customers).
    • The accounts receivable departments use the sales ledger.
    • The accounts receivable team is in charge of receiving funds on behalf of a company and applying it towards their current pending balances.
    • Collections and cashiering teams are part of the accounts receivable department.
    • The ending balance on the trial balance sheet for accounts receivable is usually a debit .

  • Valuing Notes Receivable

    • Companies have two methods available to them for measuring the net value of accounts receivable: the allowance method and the direct write-off method.
    • Notes Receivable represents claims for which formal instruments of credit are issued as evidence of debt, such as a promissory note.
    • It is simpler than the allowance method in that it allows for one simple entry to reduce accounts receivable to its net realizable value.
    • The entry would consist of debiting a bad debt expense account and crediting the respective accounts receivable in the sales ledger.
    • Differentiate between the allowance method and the write off method for valuing notes receivable

  • Reporting Receivables

    • Accounts receivable are reported as a line item on the balance sheet and in a more detailed again report.
    • Accounts receivable are reported as a line item on the balance sheet.
    • Supplementary reports, such as the accounts receivable aging report, provide further detail.
    • An accounts receivable aging report summarizes receivables based on their age—how long they have been outstanding.
    • The accounts receivable age analysis, also known as the Debtors Book, is divided into categories for current, 30 days, 60 days, 90 days, 120 days, 150 days, 180 days, and overdue that are produced in modern accounting systems.

  • Components of a Note

    • Often a business will allow a customer to convert their overdue accounts into a notes receivable.
    • Occasionally, the notes receivable will include a personal guarantee by the owner of the debtor.
    • Maker-the maker of a note is the party who receives the credit and promises to pay the note's holder.
    • Payee-the payee is the party that holds the note and receives payment from the maker when the note is due.
    • The payee classifies the note as a note receivable.