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How will u handle accounts receivable?
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Answer Posted / muhammad younus (cat, acca stu
Accounts Receivable (A/R): is the income which is earned but did not receive yet. this is the Accrual principal of Accounting, in which we should be recording income as when we earned it but not yet received cash for the transaction of income.
Accounts Receivable is preparing when there are credit transaction occurred. i.e : mr A purchase goods from Mr. B for $20000 on credit for two month.
Ans: when we goes to record this one in book of Mr. A then the transaction will be look like as :
purchases goods: $20000 Dr. (inventory is current asset)
Mr.B(a/c payable): $ 20000 Cr. (current liability) and
in book of Mr B:
Mr. A (Account Receivable a/c.): $20000 Dr.(current asset)
Sales (income statement/ P/L a/c.) : $20000 Cr. (income a/c)
after two month when when MR.A PAID for his purchased goods.
then he will be recorded it in his book as:
Mr.B (a/r) : $20000 DR (current Liability a/c)
cash paid for purchase: $20000 Cr (current asset) and
in book of MR. B as cash received from Mr.A:
cash (cash book): $20000 Dr (current asset)
Mr. A (account payable) : $20000 Cr (current liability)
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