What is accounts receivable and how to maintain accounts receivable ledger?
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What is accounts receivable and how to maintain accounts receivable ledger? Author: Ckrishwa
In every business organization or company credit sales is an unavoidable transaction. Credit sale cannot be avoided in any business organization but proper accounting of credit sales is required in any business or company. This type of accounts is called as Accounts receivable. It may also be called as Debtors Account.
Whenever a credit transaction is occurred the credit transaction should be properly accounted for through a journal voucher. The journal voucher is enclosed with the supporting documents related to the credit transactions like invoice etc., Journal voucher has to be prepared by crediting the product which was sold on credit basis and debiting the debtors account or accounts receivable account.
While crediting the sale account proper monetary value for the products sold on credit will be reflected in the inventory or sales account as sales.
While debiting the accounts receivable account or debtors account a lead has been created in the ledger of receivable to understand that some amount has to be collected to the organization or business for credit sales from a debtor.
When the debtor settles the dues they have to settle the debt by way of check or draft. When they the settle the dues the amount will be credited in the debtors account or receivable account.
The debtors account or receivable account was debited at the time of credit sales and the same debtors account or receivable account will be credited at the time of collection of dues from the debtor. So the Debtor account or receivable account is nullified or becomes nil.
Normally in an organization or business there may be so many credit sales to so many debtors. So a separate accounts receivable ledger or a debtor ledger has to be maintained for collecting the dues.
The accounts receivable ledger or debtor ledger has to be closed every month and an abstract of accounts receivable or debtor should be arrived. This should tally with the balance arrived in the general ledger under the head "Accounts receivable or Debtor account". Postings to the head of account "Accounts receivable or Debtor account" in the general ledger will be made from the journal vouchers when the credit transaction was entertained.
The format for accounts receivable or debtor account ledger has to contain the name of the debtor, journal voucher number and date in which the transaction has been taken into the receivable account, brief details about the transaction like what item was sold on credit with the details of price etc., total amount due, amount collected, source of settlement by the debtors whether by check or draft with check number and draft number and date, receipt number and date under which the draft or check has been received, balance amount due from the debtor, etc.,
