16 Nov Accounts Receiveable
Accounts Receivable – Special Considerations
Because Accounts Receivable is a specific type of account, it will be segregated into a subtotal on the financial statements. From a presentation standpoint, if invoices, credit memos, A/R aging reports, etc. will not be needed, it is preferred to have the Accounts Receivable account created as an other current asset type of account. By doing so, it will be subtotaled on the financial statements with accounts such as prepaid expenses, inventory, other receivables, and the like. If an account has already been set up as an Accounts Receivable type, it is not possible to change it to another type. The best alternative is to create a new account, and mark the old one inactive to keep it from being used in the future. Keep in mind, however, that if an invoice is created, the software will automatically make a new Accounts Receivable type account to handle the entry. If invoices and credit memos are needed, there is not a way to get around having this type of account. This type of account also important for the change from Cash to Accrual statements.