How To Calculate Average Accounts Receivable

Here, we will study about, “How To Calculate Average Accounts Receivable / Average Debtor in Accounting”?

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Average Accounts Receivable or Average Debtor is the sum of Opening Accounts Receivable and Closing Accounts Receivable divided by 2. Mathematically, we can use the following formula:

Average Accounts Receivable Debtor Formula:

Opening Accounts Receivable + Closing Accounts Receivable / 2

Here Beginning Accounts Receivable / Debtor is the Closing Balance during the Last Account Period and Closing Balance of Accounts Receivable is calculated during Current Accounting Period.

Example: If the Accounts Receivable For The Previous Accounting Period is Rs. 600000 and during the Current Accounting Period is Rs. 8000000, then Average can be found as shown below:

Average Accounts Receivable = 600000 + 800000 / 2 = 700000

If the Average of Accounts Receivable / Debtor is increasing, then it means that either the number of Customers is increasing or Credit Sales is increasing or it is due to unpaid invoices during the Current Accounting Cycle.

So, it is all about Average Accounts Receivable Calculation with Example in Accounting.