Accounts Receivable Questions

BRS - Bank Reconciliation Statement

A bank reconciliation statement is a statement prepared by organizations to reconcile the balance of cash at bank in a company's own records with the bank statement on a particular date.

The differences may arise because of the following reasons:

     - Cheques deposited into bank but not yet collected by bank

     - Cheques issued by the organization but not yet presented for payment

     - Cheques directly deposited by customers into the bank

     - Bank charges debited by bank

     - Interest credited or some receipts directly collected by bank based on org. request.

     - Some payments directly made by bank based on the organizations request.

So, the statement shows the reasons as what are the reasons for difference in balance.

When an invoice is generated and sent to the client/customer, the JE to be passed is debit customer account and credit revenue/accounts receivable account. When payment is received from customer, then debit bank account and credit the customer account concerned

Before answering the above question let us first understand the meaning of Intercompany transactions. Intercompany transactions are those transactions that takes place between two or more entities of the same group of company. So the receivable of one entity would the payable of another entity. All intercompany transactions are eliminated befor preparing the final Balance sheet of the group company.

Accounts Receivable department is very important department of the company. The responsbilities of the department is approval of credit limit to the customer study the past history of customer credit sending invoices to the customer updation of the customer credit data factoring contacts with the factoring agents follow up of customers motivating the customers to pay the dues intime and communicating the information to the management. Credit sales data estimation of credit sales for the future period request for funds to finance department whenever they required follow up of customers receivables management.