Accounts receivable - wikipedia Accounts receivable Accounting Historical cost Constant purchasing power Management Tax Major types Auditing Cost Forensic Financial Fund Governmental Management Social Tax Key concepts Accounting period Accrual Constant purchasing power Economic entity Fair value Going concern Historical cost Matching principle Materiality Revenue recognition Unit of account Selected accounts Assets Cash Cost of goods sold Depreciation / Amortization Equity Expenses Goodwill Liabilities Profit Revenue Accounting standards Generally - accepted principles Generally - accepted auditing standards Convergence International Financial Reporting Standards International Standards on Auditing Management Accounting Principles Financial statements Annual report Balance sheet Cash - flow Equity Income Management discussion Notes to the financial statements Bookkeeping Bank reconciliation Debits and credits Double - entry system FIFO and LIFO Journal Ledger / General ledger T accounts Trial balance Auditing Financial Internal Firms Report People and organizations Accountants Accounting organizations Luca Pacioli Development History Research Positive accounting Sarbanes -- Oxley Act Business portal Accounts receivable is a legally enforceable claim for payment held by a business for goods supplied and / or services rendered that customers / clients have ordered but not paid for. These are generally in the form of invoices raised by a business and delivered to the customer for payment within an agreed time frame. Accounts receivable is shown in a balance sheet as an asset. It is one of a series of accounting transactions dealing with the billing of a customer for goods and services that the customer has ordered. These may be distinguished from notes receivable, which are debts created through formal legal instruments called promissory notes. Contents 1 Overview 2 Payment terms 3 Accounts Receivable Age Analysis 4 Bookkeeping 5 Special uses 6 Related accounting topics 7 See also 8 Notes and references Overview Accounts receivable represents money owed by entities to the firm on the sale of products or services on credit. In most business entities, accounts receivable is typically executed by generating an invoice and either mailing or electronically delivering it to the customer, who, in turn, must pay it within an established timeframe, called credit terms or payment terms. The accounts receivable department uses the sales ledger, because a sales ledger normally records : The sales a business has made. The amount of money received for goods or services. The amount of money owed at the end of each month varies ( debtors ). 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. While the collections department seeks the debtor, the cashiering team applies the monies received. Payment terms An example of a common payment term is Net 30 days, which means that payment is due at the end of 30 days from the date of invoice. The debtor is free to pay before the due date ; businesses can offer a discount for early payment. Other common payment terms include Net 45, Net 60 and 30 days end of month. The creditor may be able to charge late fees or interest if the amount is not paid by the due date. Booking a receivable is accomplished by a simple accounting transaction ; however, the process of maintaining and collecting payments on the accounts receivable subsidiary account balances can be a full - time proposition. Depending on the industry in practice, accounts receivable payments can be received up to 10 -- 15 days after the due date has been reached. These types of payment practices are sometimes developed by industry standards, corporate policy, or because of the financial condition of the client. Since not all customer debts will be collected, businesses typically estimate the amount of and then record an allowance for doubtful accounts which appears on the balance sheet as a contra account that offsets total accounts receivable. When accounts receivable are not paid, some companies turn them over to third party collection agencies or collection attorneys who will attempt to recover the debt via negotiating payment plans, settlement offers or pursuing other legal action. Outstanding advances are part of accounts receivable if a company gets an order from its customers with payment terms agreed upon in advance. Since billing is done to claim the advances several times, this area of collectible is not reflected in accounts receivables. Ideally, since advance payment occurs within a mutually agreed - upon term, it is the responsibility of the accounts department to periodically take out the statement showing advance collectible and should be provided to sales & marketing for collection of advances. The payment of accounts receivable can be protected either by a letter of credit or by Trade Credit Insurance. Accounts receivable Age analysis An Accountants Receivable Age Analysis, also known as the Debtors Book is divided in categories for current, 30 days, 60 days, 90 days or longer. The analysis or report is commonly known as an Aged Trial Balance. Customers are typically listed in alphabetic order or by the amount outstanding, or according to the company chart of accounts. Zero balances are not usually shown. Bookkeeping On a company 's balance sheet, accounts receivable are the money owed to that company by entities outside of the company. Account receivables are classified as current assets assuming that they are due within one calendar year or fiscal year. To record a journal entry for a sale on account, one must debit a receivable and credit a revenue account. When the customer pays off their accounts, one debits cash and credits the receivable in the journal entry. The ending balance on the trial balance sheet for accounts receivable is usually a debit. Business organizations which have become too large to perform such tasks by hand ( or small ones that could but prefer not to do them by hand ) will generally use accounting software on a computer to perform this task. 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. The first method is the allowance method, which establishes a contra - asset account, allowance for doubtful accounts, or bad debt provision, that has the effect of reducing the balance for accounts receivable. The amount of the bad debt provision can be computed in two ways, either ( 1 ) by reviewing each individual debt and deciding whether it is doubtful ( a specific provision ) ; or ( 2 ) by providing for a fixed percentage ( e.g. 2 % ) of total debtors ( a general provision ). The change in the bad debt provision from year to year is posted to the bad debt expense account in the income statement. The second method is the direct write - off method. 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. The two methods are not mutually exclusive, and some businesses will have a provision for doubtful debts, writing off specific debts that they know to be bad ( for example, if the debtor has gone into liquidation. ) Special uses Companies can use their accounts receivable as collateral when obtaining a loan ( asset - based lending ). They may also sell them through factoring or on an exchange. Pools or portfolios of accounts receivable can be sold in capital markets through securitization. For tax reporting purposes, a general provision for bad debts is not an allowable deduction from profit - a business can only get relief for specific debtors that have gone bad. However, for financial reporting purposes, companies may choose to have a general provision against bad debts consistent with their past experience of customer payments, in order to avoid over-stating debtors in the balance sheet. Related accounting topics Associated accounting issues include recognizing accounts receivable, valuing accounts receivable, and disposing of accounts receivable. In the UK, most companies have a credit control department. Other types of accounting transactions include accounts payable, payroll, and trial balance. See also Electronic billing Debtors Factoring ( finance ) Accounts payable Balance sheet Notes and references Jump up ^ Trade Finance Global. `` Accounts Receivable Guide ''. Retrieved 2016 - 11 - 01. Jump up ^ Belverd E. Needles, Marian Powers, Susan V. Crosson. ( 2010 ) Financial and Managerial Accounting, p. 373. Jump up ^ `` Definition of credit terms ''. factoringglossary.org. Jump up ^ http://www.businesslink.gov.uk/bdotg/action/detail?itemId=1073789116&type=RESOURCES Jump up ^ http://www.accountingtools.com/allowance-for-doubtful-account Jump up ^ HM Revenue & Customs. `` Company Taxation Manual ''. Archived from the original on 2009 - 04 - 18. Retrieved 2008 - 11 - 01. GND : 4017826 - 2 NDL : 00574050 Retrieved from `` https://en.wikipedia.org/w/index.php?title=Accounts_receivable&oldid=815166986 '' Categories : Accounting terminology Asset Accounts receivable Hidden categories : Wikipedia articles with GND identifiers Talk Contents About Wikipedia Башҡортса Беларуская Беларуская ( тарашкевіца ) ‎ Čeština Dansk Deutsch Español Esperanto فارسی Français 한국어 हिन्दी Bahasa Indonesia ქართული Қазақша Lietuvių Magyar Nederlands 日本 語 Polski Русский Slovenčina Suomi Svenska Українська 中文 Edit links This page was last edited on 13 December 2017, at 04 : 54. Text is available under the Creative Commons Attribution - ShareAlike License ; additional terms may apply. By using this site, you agree to the Terms of Use and Privacy Policy. Wikipedia ® is a registered trademark of the Wikimedia Foundation, Inc., a non-profit organization. About Wikipedia

Question: what is the source of information for account receivables
Answer: invoices; invoices raised by a business and delivered to the customer for payment within an agreed time frame; invoices raised by a business and delivered to the customer for payment within an agreed time frame