ar & income stattement
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Accountsreceivable(A/R)isoneofaseriesofaccountingtransactionsdealingwiththebillingofacustomerforgoodsandservicestheyhaveordered.Inmostbusinessentities,accountsreceivableistypicallyexecutedbygeneratinganinvoiceandeithermailingorelectronicallydeliveringittothecustomer,who,inturn,mustpayitwithinanestablishedtimeframe,
calledcredittermsorpaymentterms.Accountsreceivabledepartmentsusethesalesledger.AnexampleofacommonpaymenttermisNet30,whichmeansthatpaymentisdueattheendof30daysfromthedateofinvoice.Thedebtorisfreetopaybeforetheduedate;mostbusinessentitiesofferadiscountforearlypayment.OthercommonpaymenttermsincludeNet45andNet60.
Accountsreceivable(A/R):-Moneyowedbycustomers(individualsorcorporations)toanotherentityinexchangeforgoodsorservicesthathavebeendeliveredorused,butnotyetpaidfor.Receivablesusuallycomeintheformofoperatingli
nesofcreditandareusuallyduewithinarelativelyshorttimeperiod,rangingfromafewdaystoayear.Onapubliccompany'sbalancesheet,accountsreceivableisoftenrecordedasanassetbecausethisrepresentsalegalobligationforthecustomertoremitcashforitsshort-termdebts.Ifacompanyhasreceivables,thismeansithasmadeasalebuthasyettocollectthemoneyfromthepurchaser.Mostcompaniesoperatebyallowingsomeportionoftheirsalestobeoncredit.Thesetypeofsalesareusuallymadetofrequentorspecialcustomerswhoareinvoicedperiodically,andallowsthemtoavoidthehassleofphysicallymakingpaymentsaseachtransactionoccurs.Inotherwords,thisiswhenacustomergivesacompanyanIOUforgoodsorservicesalreadyreceivedorrendered.
Accountsreceivablearenotlimitedtobusinesses-individualshavethemaswell.Peoplegetreceivablesfromtheiremployersintheformofamonthlyorbi-weeklypaycheck.Theyarelegallyowedthismoneyforservices(work)alreadyprovided.Whenacompanyowesdebtstoitssuppliersorotherparties,theseareknownasaccountspayable.
WhatDoesIncomeStatementMean?Afinancialstatementthatmeasuresacompany'sfinancialperformanceoveraspecificaccountingperiod.Financialperformanceisassessed
bygivingasummaryofhowthebusinessincursitsrevenuesandexpensesthroughbothoperatingandnon-operatingactivities.Italsoshowsthenetprofitorlossincurredoveraspecificaccountingperiod,typicallyoverafiscalquarteroryear.Alsoknownasthe"profitandlossstatement"or"statementofrevenueandexpense".Theincomestatementistheoneofthethreemajorfinancialstatements.Theothertwoarethebalancesheetandthestatementofcashflows.Theincomestatementisdividedintotwoparts:theoperatingandnon-operatingsections.Theportionoftheincomestatementthatdealswithoperatingitemsisinterestingtoinvestorsandanalystsalikebecausethissectiondisclosesinformationaboutrevenuesandexpensesthatareadirectresultoftheregularbusinessoperations.Forexample,ifabusinesscreatessports
equipment,thentheoperatingitemssectionwouldtalkabouttherevenuesandexpensesinvolvedwiththeproductionofsportsequipment.Thenon-operatingitemssectiondisclosesrevenueandexpenseinformationabout
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activitiesthatarenottieddirectlytoacompany'sregularoperations.Forexample,ifthesportequipmentcompanysoldafactoryandsomeoldplantequipment,thenthisinformationwouldbeinthenon-operatingitemssection.
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