Finance Management (Discussion questions)

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Accounts receivable (AR)

Accounts receivable (AR) refers to the means by which companies record sales and send statements and bills to their customers. In simple terms, AR keeps track of the customers' unpaid bills and the company's revenues. When sales are recorded, invoices are sent to customers. Apart from the total debt owed by customers, invoices contain information about discounts offered by the company to customers as incentives to pay invoices in a timely manner (Baker & Powell, 2010). When the invoice is posted, the revenue is documented as income. In most cases, when the invoice is posted, the system increases or credits the balance within a revenue account. Since the client has not yet paid the invoice, the invoice amount also increases or debits an asset account referred to as accounts receivables. Most common forms of receivable accounts include customer accounts receivable, employee...
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