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In: Accounting

How can the accounts receivable ledger be used in managing a firms account receivables?

How can the accounts receivable ledger be used in managing a firms account receivables?

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Expert Solution

Accounts receivable also known as customers ledger is a subledger in which all credit sales made by the entity is recorded.

Firm's accounts receivable are an important part of calculating its profitability and it also provide the clearest indicator of the business's income.
Accounts receivable is an asset, as it shows income to be received in the coming future.

Some points which shows how accounts receivable ledger can be used in managing firms account receivables :
> Recording of all credit sale entries in a single ledger helps to know the future income of the firm
> Details of all substantial information such as date and number of invoice, customer details are all maintained in the ledger which can be useful information (all in one place)
> Customer wise details such as invoice raised to them, debit and credit notes issued to them and all amounts to be
received from them are all available in one place.
> Any risk of non-payment or delay in receiving the payments from customers can be monitored on a regular basis.
> Any bad debts of the receivables to be recognised in the books of accounts can be found out.
> Recording of data electronically is always better than manual data maintenance
> Helps the firm to organise and have data in a more precise manner.

ekkarill92 answered 1 year ago
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