Revenue and receivables : Tax Preparation Blog
 Tax Master DFW - Your local tax professionals 
Call us - (972)436-3786 
Visit us in Lewisville, Tx

HomeAbout UsContact UsServicesBookkeepingTax Prep and IRS News 
Form LLC/ CorporationTax BlogIncome TaxHome Ownership & TaxesGlossary of Terms


Income Taxes, Tax Filing, Tax refunds in DFW
IRS Help
Tax Preparation, tax filing, & tax refund Blog

Revenue and receivables

by Tax Master DFW on 11/30/14

Revenue and receivables

Keywords:
#Arlington_Tax_Preparation, #Tax_Preparation, #Tx_Tax_prep, #Texas_Tax_Preparation, #Arlington_Tax_Prep, #Arlington_TX, #Tax_Prep, #DFW_Tax_Prep, #Tax_Filing, #Taxes, #Lewisville_Tax_Prep, #Lewisville_Tax_Preparation, #DFW_Tax_Preparation, #Arlington, #Tarrant_County, #Reduce_Taxes, #Tax_Refunds, #Pay_Taxes, #Tax_Help, #Bookkeeping, #DFW_Bookkeeping, #Investing, #tax_bookkeeping, #DFW, #Texas, #North_Texas, #Filing_Taxes, #1099, #W-2, #W-4, #W-9 



In most businesses, what drives the balance sheet are sales and expenses. In other words, they cause the assets and liabilities in a business. One of the more complicated accounting items are the accounts receivable. As a hypothetical situation, imagine a business that offers all its customers a 30-day credit period, which is fairly common in transactions between businesses, (not transactions between a business and individual consumers). 

An accounts receivable asset shows how much money customers who bought products on credit still owe the business. It's a promise of case that the business will receive. Basically, accounts receivable is the amount of uncollected sales revenue at the end of the accounting period. Cash does not increase until the business actually collects this money from its business customers. However, the amount of money in accounts receivable is included in the total sales revenue for that same period. The business did make the sales, even if it hasn't acquired all the money from the sales yet. Sales revenue, then isn't equal to the amount of cash that the business accumulated. 

To get actual cash flow, the accountant must subtract the amount of credit sales not collected from the sales revenue in cash. Then add in the amount of cash that was collected for the credit sales that were made in the preceding reporting period. If the amount of credit sales a business made during the reporting period is greater than what was collected from customers, then the accounts receivable account increased over the period and the business has to subtract from net income that difference. 

If the amount they collected during the reporting period is greater than the credit sales made, then the accounts receivable decreased over the reporting period, and the accountant needs to add to net income that difference between the receivables at the beginning of the reporting period and the receivables at the end of the same period.

Comments (0)


Leave a comment


What do you think of our prices compared to other tax preparing services?The best deal in the market
half the price of similar firms
Tax Master DFW offers personal service at a lower price
Tax Master has preparers fluent in Spanish and English
Consult one of our Tax Professionals before acting on any written Blog Post.  Each Tax Case is specific and we will assist you in the best manner for your scenario.
Arlington Tax Preparation
Lewisville Tax Preparation
DFW Tax Filing
Custom Search
DFW Tax Preparation
Many articles are third party works - purchased Private Label Rights - Articles are not necessarily our thoughts or Financial / investment advice.
Arlington - Dallas - Mansfield - Fort Worth - Flower Mound - Denton - Coppell - Roanoke - The Colony