What is the Definition, Characteristics, and Types of Receivables in Accounting? Accounts receivable is one of the elements of current assets in the company’s balance sheet arising from the sale of goods, services or the provision of credit to debtors whose payments are generally given within 30 days to 90 days.
What is receivable? In a broad sense, receivable is a claim against other partie in the form of money, goods or services sold on credit.
In general, receivables arise as a result of the sale of goods and services of the company, where payment by the party concerned will only be made after the date of the sale and purchase transaction.
Considering that receivables are very important company assets, reasonable procedures and satisfactory methods must be carried out with debtors so that it is necessary to develop a good procedure for the progress of the company.
In this article, we will discuss about receivables including the characteristics of receivables and the types of receivables in accounting.
The Characteristics Of Accounts Receivable Are
The characteristics of receivables can be analyzed through the length of debt that must be paid before the agreed time.
More fully, the following are the characteristics of the existence of receivables;
Existence Of Maturity Value
Maturity value is a term that describes the sum of the main transaction value then added to the interest value charged to be paid on the maturity date.
A buyer who transacts on credit not only pays the amount of the value of the goods that have been purchased, but also the interest because he asks for time to pay for the goods with the due date.
There Is A Due Date
The second characteristic of accounts receivable is the maturity date. The due date can be determined from the length or age of the receivables.
Generally, sellers use two types of age measurement, namely months and days. If it is a month old, then the maturity date is the same as the date the buyer made the credit transaction, it’s just a different month.
If the age is daily, then a calculation must be carried out to determine the exact maturity date.
Receivables can occur because the buyer decides to make a transaction on credit and this causes interest.
Interest in this case is paid as a consequence of the buyer asking for a certain payment time and as an advantage for the seller because he has been patient in waiting for the repayment of the credit.
The amount of interest in this case is according to the seller’s policy in determining the interest rate used.
Types Of Receivables Are
Receivables consist of several types, namely:
The definition of accounts receivable is an amount of credit purchases from customers. Receivables arise as a result of the sale of goods or services.
These receivables are usually expected to be collected within 30-60 days. In general, this type of receivable is the largest receivable owned by the company.
Notes Receivable is a formal letter issued as a form of debt measurement. Notes receivable usually have a term of between 60-90 days or longer and require the debtor to pay interest.