Answer
Monitoring risk related to accounts receivable:
In addition to estimating the allowance for doubtful debts, ageing schedule has other use to monitor the risk related to its accounts receivable.
Work Step by Step
In this process the company is required to assess the accounts receivable and ask -
- Is the customer account balance in agreement with the due dates?
- Is the company's credit risk increasing?
- It the percentage of receivables higher for receivables over 90 days?
The Company must analyze and submit a report of the status of receivables.
