Accounts Receivable Ledger Flashcards, test questions and answers

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What is Accounts Receivable Ledger?

An accounts receivable ledger is a tool used by businesses to track the amount of money owed by customers. It is a record of all outstanding invoices, which lists each customer and the amount that they owe for goods or services purchased on credit. The accounts receivable ledger provides a tangible overview of how much debt the company has available, allowing them to make decisions regarding collection strategies, financial planning, and cash flow management.The accounts receivable ledger consists of four key components: 1) Customer name this is used to identify who owes the company money and helps accountants match payments with invoices. 2) Invoice number this helps companies match payments with specific invoices or services provided. 3) Amount due this is simply the total cost of goods or services purchased on credit minus any payment already made by the customer. 4) Payment date this records when payments are received from customers and allows accountants to keep track of their payment history over time. The accounts receivable ledger is an important tool for businesses as it allows them to maintain accurate records about their customers’ debts and keeps them informed about their current financial situation. This information can be used to assess risk levels associated with particular clients as well as plan future collections strategies based on past patterns in customer behavior. Additionally, it acts as an effective reminder system for overdue debts which may have been overlooked in busy times such as holidays or other special occasions when fewer staff members may be available to manage accounts receivables efficiently.