Some companies find that offering incentives to credit customers can help encourage early payments, increasing cash flow and reducing the risk of bad debt. A sales discount is one incentive that many ...

When it comes to building out a balance sheet, an organization’s accounts payable come into play. As you work through a balance sheet, you’ll need to determine whether accounts payable are an asset or ...

Allowance for doubtful accounts is a common contra asset listed on a company's balance sheet under accounts receivable. When a company sells its products or services to customers on credit, the ...

Contra accounts adjust asset values, like equipment depreciation reducing fixed assets. Increased allowance for doubtful accounts may signal rising uncollectable receivables. Companies use contra ...

IMGCAP(1)]In many businesses the accounting for accounts receivable utilizes the allowance method to provide a reasonable estimate of the net collectability of the firm’s trade receivables. Most ...

Quick ratio: Calculated by dividing current assets (excluding inventory) by current liabilities. By excluding inventory, the ratio focuses on the company's ability to meet obligations using the most ...