- Analyze the criteria for the sale of receivables.
- Propose one method that would achieve the maximum amount of money from the sale.
According to the Wiley CPA review, “Accounts Receivable (AR) is the proceeds or payment that a business or a company gets back from their customers” A debtor who is person or enterprise that owes money to the business is a customer, who have purchased goods & services on credit. Usually the credit period is short ranging from few days to months or in some cases maybe a year.
Four different types of receivables are:
Accounts Receivable, notes receivable, trade receivables and non-trade receivables. The most liquid is notes receivable. Receivables are valued on the balance sheet at net realizable value.