Answer to Question #257453 in Accounting for Angel

Question

The time required to keep the Accounts receivable records can be greatly reduced by computerization. Elaborate the statement basing on the concept of Aging Receivables in a computerized accounting system.

Answer 1

Aging receivables is the process through which accounts receivables are differentiated depending on how long they have been outstanding that is the length of time the debt has been outstanding. Normally it is done in months or quarterly depending on the accounting structure of the organization. It is a tiresome process since it requires strict filling for the sake of unpaid invoices evidence as well as proof of work done. It is the basis under which the company determines doubtful debts and their provision percentage. Computerization has eased the process of accounts receivable aging by using an aging schedule that is used to identify clients that are late in paying their invoices. Computerized accounting usually produces AR aging reports which allow management to effectively control collections and handle exceptions as they happen without doing any extra effort to identify exceptions.