Question

Define receivables and identify the different types of receivables

Answer 1

Answer :-

Account Recievable

Receivables represent the amount to be collected from the customers to whom the goods or services have been sold on credit .In other words; customers from whom the amount have to be collected in near future are called receivables. Investment in receivables represents the funds blocked for the period beginning from the date of sale and ending with the date of payment.

Types of Receivables

1) Accounts Receivables;

Accounts Receivables are created when the goods have been sold on credit and it represents the amount owed by the customers. Accounts receivables are shown on the asset side of the balance sheet.

2) Notes Receivables;

  Notes receivable is the written agreement and generally it is for the period of 90 days or more than the 90 days. Notes receivables are also shown on the assets side of the balance sheet.

3) Other Receivables;

Other receivables include interest receivable, advances to the employees etc. These are shown under the separate heading in the balance sheet.