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Describe what measures might best be used to monitor the appropriateness of accounts receivable balances. Describe...

Describe what measures might best be used to monitor the appropriateness of accounts receivable balances. Describe the data points needed to construct each measure described.
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Answer #1

The best measure/method which is used to monitor the appropriateness of accounts receivable balances is :

Following the Accounts Receivable through their Age-wise doubtfulness of realisation. The age of the debt is calculated in number of days and percentage of realisation in each range of age-group is estimated as per past experience.

There exist a rational in estimating the doubtful accounts through Age-wise realisation control. More realisation is from the younger Receivables to that of old one.

To construct the Age-wise method of Receivables control, we require 1) Age-wise Accounts credit details, 2) Percentage of realisation under each Age group, to access the Good Accounts Receivables at the year end.

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