Cash VS Accounts Receivable
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 Book and then it is transferred to Balance Sheet Under Current Assets On Asset Side while Accounts Receivable Are Recorded In Sub-Ledger And Then Transferred to Accounts Control
Account and then finally transferred to Balance Sheet Under Current Assets On Asset Side.
4. Investors And Big companies are interested in the Cash position of the business known from the Statement of Cash Flows while in case of Accounts Receivable, Investors and creditors and other financial institutions are interested in the Accounts Receivable Turnover Ratio in order to invest or give credit credit to the company
operating the business.
So, these are the main differences between Cash And Accounts Receivable In Accounting.
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