AR
This document is sent to a customer requesting payment for goods or services provided.
What is an invoice?
A reduction in the amount owed due to early payment terms such as 1%10 Net 30.
What is cash discount (early payment discount)?
This accounting entry is used to record financial transactions in the ledger.
What is a journal entry.
This financial statement shows a company's revenues, expenses, and profit over a period of time.
What is the income statement
This document provides details on which invoices a customer is paying.
What is a remittance advice?
This document authorizes a company to buy goods or services from a supplier.
What is a purchase order?
Every journal entry must include both of these
What is a credit and debit?
This financial metric represents the amount remaining after expenses are deducted from revenue.
What is profit?
A reduction taken by a customer due to shortages, pricing issues, or damaged goods.
What is a deduction?
A vendor issues this document to reduce the amount owed due to returns or pricing corrections.
What is a credit memo?
This process compares account balances to supporting documentation to ensure accuracy.
What is reconciliation?
This financial statement provides a snapshot of a company's assets, liabilities, and equity.
What is the balance sheet?
The older an invoice becomes, the more likely it is to become this.
What is bad debt?
This document is typically created by an employee or department to request the purchase of goods or services before a purchase order is issued.
What is a purchase request?
This type of journal entry is made when a good or service is provided rather than when payment is made or received.
What is an accrual.
This process estimates future revenues and expenses based on historical trends and business expectations.
What is forecasting?
This AR metric measures the average number of days it takes to collect payment after a sale.
What is Days Sales Outstanding (DSO)?
The average number of days a company takes to pay its suppliers.
What is Days Payable Outstanding (DPO)?
This recurring accounting cycle includes closing the books, reconciling accounts, posting accruals, and preparing financial reports.
What is the month end process
DIO + DSO - DPO =
What is the Cash Conversion Cycle?