Balance sheet accounts receivable

When a sale is made, it might be a sale for cash or it might be a sale on credit. If the sale is on credit terms then the customer will probably take the goods with him or arrange to have them delivered but he will not pay for the goods at that time. Instead, the customer will be given or sent an invoice detailing the goods and their price and the normal payment terms. This will tell the customer when he is expected to pay for those goods.

Under the accruals concept, a sale is included in the ledger accounts at the time that it is made. For a sale on credit, the sale is made at the time that the invoice is sent to the customer and therefore the accounting entries are made at that time as follows:

When the customer eventually settles the invoice the double entry will be:

Related posts:

1. Accounts receivable collection period
2. Balance sheet accounts payable
3. The general journal and general ledger accounts
4. Bookkeeping principles
5. Accruals concept