Purchases A/c -Dr 5000 To Sundry Creditors 5000
No, if your accounts receivable is increasing then you are not collecting cash in from your debtors as quick as you are raising invoices to them therefore your cash flow is decreasing due to trapping working capital in debtors
Cash a/c to debtors a/c
The components of current assets are creditors, cash, debtors and stock.
Examples of current assets are cash(in hand or at bank),
for the purpose of business working capital bank sanction against property and stock+debtors-credit = cash credit
Purchases A/c -Dr 5000 To Sundry Creditors 5000
No, if your accounts receivable is increasing then you are not collecting cash in from your debtors as quick as you are raising invoices to them therefore your cash flow is decreasing due to trapping working capital in debtors
Debit Asset a/c if asset a/c is bought and credit Cash a/c OR if these are sundry supplies debit that head and credit cash acct
Cash a/c to debtors a/c
Average trade debtors average the number of days required for a company to receive payment from its customers. A large number means that a company must invest more cash in its unpaid accounts receivables, and a smaller number means that more cash is being made available for other uses.
The components of current assets are creditors, cash, debtors and stock.
Examples of current assets are cash(in hand or at bank),
Sales - amount to be received from selling good or service. ■ Cash from debtors. ■ Capital. ■ Lone from bank.
If cash is received from debtors then accounts receivable will be credited otherwise to whom it is received will be credited.
Discout allowed incourage the debtors to avail discounts and save money and they tries to pay as quick as possible
The average amount of days after making a sale before receiving cash. DCP = Receivables/Average sales per day or DCR = (average debtors/turnover)*365