Archive for July 2018

Accounts receivable are debts to the organization, i.e. debts to receipt.Accounts receivable arise when goods (works, services) are sold and money for them has not yet been received, or when an advance payment has been paid to the supplier and goods (works, services) have not yet been credited to it.In case there are justified doubts that the receivables will not be repaid, a reserve is created for such a debt, which reduces the financial result.

The procedure for forming a provision for doubtful accounts receivable in accounting differs from the procedure for its formation for calculating the tax base for income tax:

If collection of receivables is impossible due to the expiration of the limitation period, liquidation of the debtor, etc., this debt is subject to write-offs to reduce the financial result or from the reserve (if the reserve was created for it). The process of the accounts receivable financing happens to be important there.

Accounts receivable management

The main task of receivables management is to ensure its repayment within the terms stipulated by the contracts, as well as drawing up contracts in such a way as to shorten the time between the shipment of goods (work performance, provision of services) and the receipt of cash.

The factor of turnover of accounts receivable shows the period of time during which money is received from customers:

K = (Average accounts receivable x 365) / (Revenues)

The smaller the value of this indicator, the better organized the work on management of accounts receivable.

Information on accounts receivable is reflected in the financial statements:

  • line 1230 of the balance sheet;
  • In Sections 5.1 and 5.2 of the explanations to the balance sheet and the profit and loss account (the form recommended by the order of the Ministry of Finance).

More detailed information is reflected in the accounting on the accounts:

  • The balance on the debit of account 60 “Settlements with suppliers and contractors” (advances given)
  • The balance on the debit of account 62 (debts for the sold goods, works and services)
  • Balance on the debit of accounts 68 “Settlements with the budget” and 69 “Settlements on social insurance and collateral” (overpayment to the budget and extra-budgetary funds)
  • Balance on the debit of account 71 “Settlements with accountable persons” (debt of accountable persons)
  • Balance on the debit of account 73 ” Settlements with personnel for other transactions “
  • Balance on the debit of account 75 “Settlements with founders” (debt of founders for contributions to authorized capital)

These are the issues that are to be dealt at the beginning.  This is an essential option and that is to be dealt perfectly. Every part happens to be essential there now. It is important to track these matters and that is the reason that you will be having the proper steps.

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