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A company has seen in the past that some of their credit customers never pay. Does...

A company has seen in the past that some of their credit customers never pay. Does this affect the financial statements for the current year?

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Answer : - The credit customers are recorded as receivables in the asset side of the balance sheets. The more the receivables the more credit customers company have. It helps the company to increase their sales but if the credit customers does not pay their payments on time or does not pay at all it becomes the bad debts of the company will may not receive. The less cash company has the more delay will be in paying the creditors, salaries to the employees, the dividend to the shareholder.

Conclusion : - Credit customers never paying the payment affects the financial statements of the company. The company shows the past receivables in the current year financial statements. The company should take measures against the credit customers or should make sales with them.

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