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Sagot :
Existence and value - Are the accounts for the AR really there, and can they be collected.
What are accounts receivable?
Money owed to a business in the near future is represented by the asset account known as accounts receivable on the balance sheet. When a business permits a customer to pay for its products or services on credit, accounts receivable are generated. Similar to accounts receivable, accounts payable tracks money that is due as opposed to money that will be collected. The ratio of accounts receivable to sales outstanding or days sales outstanding can be used to determine how strong an organization's AR is. To determine when the AR will really be received, a turnover ratio study might be performed.
Briefing:
Existence is an audit affirmation that the auditor must examine to ensure that all accounts receivable are present.
To know more about accounts receivable, visit:
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