Accounts Receivables What is the importance of the turnover of Accounts Receivab
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Question
Accounts ReceivablesWhat is the importance of the turnover of Accounts Receivables? Why is it is essential for organizations to keep cash reserves on hands? Is it possible to still bring in a lot of revenue, but still be short on cash? How can this happen or not happen?
Accounts Receivables
What is the importance of the turnover of Accounts Receivables? Why is it is essential for organizations to keep cash reserves on hands? Is it possible to still bring in a lot of revenue, but still be short on cash? How can this happen or not happen?
Accounts Receivables
What is the importance of the turnover of Accounts Receivables? Why is it is essential for organizations to keep cash reserves on hands? Is it possible to still bring in a lot of revenue, but still be short on cash? How can this happen or not happen?
Explanation / Answer
Answer: Accounts receivable is the money that a company has a right to receive because it had provided customers with goods and/or services. For example, a manufacturer will have an account receivable when it delivers a truckload of goods to a customer on June 1 and the customer is allowed to pay in 30 days.
The accounts receivable ratio is one of the financial performance indicators that businesses monitor. It is useful for companies that sell goods and services on credit. Accounting theory considers the accounts receivable ratio to be one of the asset turnover or efficiency ratios.
Answer: Because The cash reserves refers to the money a company or individual keeps on hand to meet its short-term and emergency funding needs.
Answer: A company can have a revenue but not have cash because profit is computed using revenues and expenses, which are different from the company's cash receipts and cash disbursements.
where cash is paid out, but the profits are not reduced at the time of the payment, include prepayments of insurance, payments to increase the inventory of merchandise on hand, and payments to reduce liabilities.
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