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At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.
The following information pertains to Striker Corporation, together with its DSO of the firms against which it benchmarks. The firm's new CFO believes that the company could reduce its receivables enough to reduce its DSO/ACP to the benchmarks’ average. If this were done, by how much would receivables decline? Use a 365-day year. Sales=P110,000; Accounts receivable= P16,000; Days sales outstanding (DSO/ACP)=53.09; Benchmark days sales outstanding (DSO/ACP)=20.00 *
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