Accounting Tutorial Accounts Receivable Training Lesson 9.1

Learn how to use accounts receivable in accounting at www.teachUcomp.com. A clip from Mastering Accounting Made Easy. http://www.teachucomp.com/tutoracctmain.htm - the most comprehensive Introductory Accounting tutorial available. Visit us today!

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welcome to your free video lesson from
THU comp incorporated be sure to check
out your exclusive discount offer at the
end of your free lesson when a customer
makes a purchase even when on credit the
accrual principal dictates that the
revenue is to be recorded in the
accounting period when the purchase was
made most companies extend some amount
of credit through invoicing when a
customer agrees to pay for received
goods or services at a later point in
time they're often sent an invoice that
they have to pay by the date specified
this day is usually either 30 60 or 90
days from the purchase date when the
purchase is made an entry must be made
to reflect revenue earned since the
company receives no cash at the time of
sale it will instead attribute the
amount of the sale to an asset account
called accounts receivable once the
customer room its payment the amount of
the payment is then removed from the
accounts receivable account and
attributed to the cash or checking
account for example let's assume that a
customer makes a purchase of one hundred
dollars in goods in january and agrees
to pay the invoice for the sale in
February when the purchase is initially
recorded you would debit the accounts
receivable for one hundred dollars and
credit the appropriate income account or
accounts for one hundred dollars then
when the customer room its payment
februari you'll record another entry
which debits the cash or checking
account for the 100-dollar payment
amount and credits the accounts
receivable for the 100-dollar payment
which was made if using an accounting
software application much of the
accounting occurs behind the scenes as
you create invoices and receive payments
let's take a look at how each one of the
most commonly used software applications
for accounting can handle accounts
receivable quickbooks
quickbooks allows you to create sales
invoices for customers quickly and
easily when creating the invoices the
total amount of the invoice debit
accounts receivable and the amounts
posted for each line item in the invoice
can credit the selected income account
once again this is all going on behind
the scenes quickbooks is also very
flexible when accepting customer
payments you can receive payments for
items or services at the time of sale or
you can receive payments that can be
matched to invoices that have been
created for your customers
it can handle prepayments overpayments
and partial payments to when you receive
a payment amount you can select to which
invoice the payment will be applied you
can also then select into which account
you want to deposit the amount received
this then credits the accounts
receivable account for the payment
amount and debits the selected cash
account by the same amount when looking
at the screenshots of the receive
payments and sales receipts screens and
quickbooks note that it also includes an
option to group the received payment
with other undeposited funds you can
then take funds from this account to the
bank later when you make a deposit this
will also have the added benefit of
making account reconciliation much
easier when using QuickBooks all
recording of debits or credits is
handled by the program behind-the-scenes
there is no other recording or posting
that needs to be done by you in fact it
can be very detrimental to a quickbooks
company file to make general journal
adjustments to accounts receivable as it
will not know exactly 2 which invoices
the adjustment should be applied
peachtree each tree is very comfortable
to quickbooks in that it can record
customer payments at the time of sale
and it can also create invoices and then
receive payments on the invoices
payments can be applied to the oldest
outstanding invoice or you can select
which invoices the payment amount is
attributed excel once again you have the
flexibility in Excel to create your own
accounts receivable spreadsheet you have
complete control over the layout and
design just as you would in a manual
accounting system that uses paper if
creating an accounts receivable ledger
in Excel you would probably want to
include columns for the customers name
the invoice or job reference number the
date the invoice was sent the dated is
due and the amount then you would want
to customize it is required for your own
business needs for example if you offer
early discounts for your customers for
early payment you would want to add a
column for the date on which the payment
must be remitted in order to receive the
discount and the amount of the discount
you can post this journals information
to your general ledger using customized
excel formulas keep in mind that with
knowledge of Excel you can create
formulas that can join all the necessary
information together between
spreadsheets having a good working
knowledge of Excel combined with
knowledge of the necessary accounting
practices would allow you to build your
own tailor-made accounting system
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