What Is the Aging of Accounts Receivable Method? In accounting, aging of accounts receivable refers to the method of sorting the receivables by the due date to estimate the bad debts expense to the business. Accounts receivables arise when the business provides goods and services on a credit to the clients.
Correspondingly, how is accounts receivable aging tested?
How to Audit Accounts Receivable
- Trace receivable report to general ledger. …
- Calculate the receivable report total. …
- Investigate reconciling items. …
- Test invoices listed in receivable report. …
- Match invoices to shipping log. …
- Confirm accounts receivable. …
- Review cash receipts. …
- Assess the allowance for doubtful accounts.
Beside this, what is aged receivables in accounting? Accounts receivable aging (tabulated via an aged receivables report) is a periodic report that categorizes a company’s accounts receivable according to the length of time an invoice has been outstanding. It is used as a gauge to determine the financial health of a company’s customers.