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Here we will study about Provision For Doubtful Debts Journal Entry or Allowance For Doubtful Accounts Journal Entry in Accounting. You may also be Interested In, “ What is A Debit Balance In Allowance For Doubtful Accounts ” What Are Allowance For Doubtful Accounts? Allowance for Doubtful Accounts are an estimation on the Total Debts Due From Customers ( Accounts Receivable ). There are chances that few percentage of total debts may not be recovered from our customers, so it is better to makes an Allowance or Estimation or Provision on Accounts Receivable in order to carry on the business in a safe way and avoid unavoidable loss to the business. Before Passing Accounting Journal Entry For Allowance For Doubtful Accounts, you must remember that: 1. While Making An Allowance on Accounts Receivable, The Accountant of the Company must consider Matching Principle of Accounting (GAAP) that revenues must be matche...

Here we will  study about Asset Turnover Ratio Formula, Definition, Interpretation and finally its Importance in Accounting. Asset Turnover Ratio Definition Asset Turnover Ratio shows the efficiency of management in utilizing the assets of the company in generating revenues for the business. You may also be interested in Return On Assets Now we need to understand What is Asset Turnover Ratio Formula? It is the ratio which is obtained by dividing the Net Sales By Average Total Assets. Mathematically, we can write as: Assets Turnover Ratio = Net Sales / Average Total Assets Here Average Total Assets is = Opening Assets + Closing Assets / 2 Example: If the Net Sales From Income Statement is Rs. 60000, Opening Assets is Rs. 500000 and Closing Assets is Rs. 700000, then Assets Turnover Ratio can be calculated from the above Formula as: Assets Turnover Ratio = 600000 / 600000 = .1 Her...

Here we will study about Cash VS Accounts Receivable (Debtors) In Accounting. 1. Any amount or payment received or paid in the form of money or currency other than Credit Payments And Receipts are Cash in Accounting. Cash is a Current Asset as usually it is received or paid very quickly and instantly within the short period of time whereas Accounts Receivable are the payments received by the company from customer in future period of time. This amount is convertible into cash very quickly, normally within one year and it is basically is a Cash Equivalent. Accounts Receivable are Current Assets and transferred to Balance Sheet On Asset Side. 2. Cash can be used for making prompt or instant payment and for making daily expenses that are necessary for day to day conduct of the business whereas Accounts Receivable can not be used for making instant payments rather than payment is made at later date from the customers. 3. Cash is recorded in Cash B...

We already studied about Accounts Receivable and Sales in our previous articles, but here we are concerned with the difference between Accounts Receivable And Sales (Accounts Receivable VS Sales). 1. Nature of Accounts: The main difference between Accounts Receivable And Sales is the Nature of Accounts. Accounts Receivable are the debts due that are payable by the customer to company within the specified Accounting Period, usually within one Year. Accounts Receivable are Current Assets And transferred to Balance Sheet . While Sales is A Revenue and it is the price of goods sold or services rendered by company to its customers. Sales is transferred to Income Statement or Profit And Loss Statement to calculate the profits on goods sold or services rendered by the company to its customers. You may also be interested in “ Difference Between Income Statement And Balance Sheet ” 2. Accounting Journal Entry For Accounts Receivable, following Acc...

What is Return On Assets Return On Assets means that how much efficient the management of the company is in managing the total assets of the company to generate revenues for the company. The ratio is used to judge the performance of the management of the company in efficient use of business’s resources (Assets) to generate profits (Income) for the business. Return On Assets Formula It is the ratio of Net Income To Total Assets. Mathematically, we can write as: Return On Assets = Net Income / Total Assets   Here Net Income is obtained from Income Statement of the Company, while Total Assets include both Current Assets And Non Current Assets and these are obtained from the Balance Sheet of the Company. This ratio is expressed in term of percentage (%). Example Suppose, from the income statement of the company, net income is Rs. 500000 while Total Assets are Rs. 1000000, then the ratio is: 500000 / 1000000 = .5 Interpre...