In most companies, what drives the balance is sales and costs. In other words, causing the assets and liabilities of a company. One of the more complex accounting articles are obligors. If a hypothetical situation, imagine a company that offers all its customers a period of 30 days credit, which is quite common in transactions between companies, (not transactions between one company and individual consumers are).
An accounts receivable active shows how much money customers who bought the goods on credit is still required. It is a promise that it will have. In short, debtors are the uncollected sales revenues at the end of the accounting period. Cash does not increase until it actually that collects money from corporate customers. The amount of money in accounts receivable is included in the total revenue from the sale of the same period. The company made sales, even if it is all the money from the sale have not yet received. Proceeds from the sale, than is not equal to the amount of cash that the company is built.
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To the actual cash flow, the auditor must deduct from the amount of credit is not collected from the proceeds of the sale in cash. Then add the amount of money collected for credit sales that are generated during the previous reporting period. If the amount of credit is a company that is created during the reporting period in excess of what has been collected from customers, and then the account receivables of accounts during this period the company has increased and the net result to subtract the difference.
If the amounts during the reporting period is greater than the credit sale, then accounts receivable decreased during the period and the accounting officer must add net income difference between the claims at the beginning of the reporting period and the claims made by the end of the same period.
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