Accounts receivable (A/R) is one of a series of accounting
transactions dealing with the billing of customers who owe
money to a person, company or organization for goods and
services that have been provided to the customer. In most
business entities this is typically done by generating an
invoice and mailing or electronically delivering it to the
customer, who in turn must pay it within an established
timeframe called credit or payment terms.
An example of a common payment term is Net 30, meaning
payment is due in the amount of the invoice 30 days from
the date of invoice. Other common payment terms include Net
45 and Net 60 but could in reality be for any time period
agreed upon by the vendor and the customer.
The account receivable is the money owned by a company from
customers for providing goods or services on credit. A sale
is generally considered as account receivable once the
invoice is sent to the customer.
From the following data calculate (i) P/V Ratio (ii) Profit
when sales are Rs.20,000 and (iii) the new Break-Even
Point, if the selling price is reduced by 20%
Fixed expenses Rs. 4,000
Break-Even-Pont Rs. 10,000