What are receivables? Compare short-term and long-term receivables

What are receivables? Learn about receivables (trade receivables, internal receivables, other receivables), compare short-term receivables & long-term receivables

I. What is receivable?

Accounts receivable are a type of current assets of the enterprise, which plays a very important role in the enterprise’s ability to pay. Therefore, accountants need to account in detail, specifically, accurately, and promptly for each subject, each type of contract…

Accounts receivable reflect the amount of debt that needs to be collected and the payment status of receivables in the production and business process of the enterprise.

II. Business receivables

1. Customer receivables

1.1 What are trade receivables?

Accounts receivable from customers are amounts due from customers who have purchased products, goods, and services from a business but have not yet paid.

1.2 Accounts used to record customer receivables 

To reflect customer receivables, we use account 131. This account is used to reflect receivables as well as the payment process between the enterprise and customers for money from selling products, goods, investment real estate, fixed assets, providing services, etc.

1.3 Principles of accounting for customer receivables 

• Detailed and specific accounting for each receivable object, each receivable content, detailed tracking of short-term receivables, long-term receivables and recording for each payment;
• Receivables are customers who have economic relations with the enterprise: purchasing goods, products, receiving the provision of goods and services, investment real estate, fixed assets, etc.;
• Do not reflect in this account economic transactions arising from cash, checks, or bank receipts;
• It is necessary to classify debts: due debts, bad debts, irrecoverable debts… then proceed to set up provisions for irrecoverable debts;
• In a sales contract, if a business provides goods or services that do not comply with the contract, the buyer can request the business to reduce the price or return the delivered goods.

For example:

Company A sells to company B an order of 100 speakers, unit price 500,000 VND/speaker, VAT is 10%, not collected yet. 

Accounting records and accounts as follows: 

Company A: Record receivables from customer B

Debit account 131 (B): 55,000,000;

Account 5111: 50,000,000 (100 pieces x 500,000 VND/piece);

Account 33311: 5,000,000 (50,000,000 VND/unit x 10%).

>> See more: How to account for account 131 – customer receivables.

2. Internal receivables

2.1 What are internal receivables? 

Internal receivables are debts owed by an enterprise to a superior or a affiliated or dependent unit or parent company for amounts paid, collected or paid on behalf of the subordinate unit that the subordinate unit is obliged to pay to the superior or the superior must pay to the subordinate. 

2.2 Accounts used to record internal receivables

To reflect internal receivables, we will use account 136. Account 136 includes 2 sub-accounts as follows: Account 1361 and Account 1362.

• Account 1361 – Operating capital in affiliated units: This account exists only in the parent unit (corporation or company) to reflect the existing capital in the affiliated unit directly assigned by the parent unit or formed by other methods. This account does not reflect the capital that the parent company invests in the subsidiary, these amounts are shown through account 221;
• Account 1368 – Internal receivables: Reflects all other receivables between internal units.

2.3 Principles of accounting for internal receivables

• Parent company: 
  • Capital, funds or expenses assigned or granted to subordinates;
  • Business capital lent to subordinates by superiors;
  • Subordinates must submit to superiors according to regulations;
  • Amounts collected by subordinates;
  • Amounts paid by superiors on behalf of subordinates;
  • Other current income.

• Subsidiary companies:
  • Amounts granted by superiors but not yet received (except for business capital and expenses);
  • Business loan;
  • Amounts collected by superior units;
  • Amounts paid on behalf of superior units and other internal units.

Note:

Account 136 needs to be accounted for in detail for each unit that has a payment relationship and each internal receivable needs to be monitored separately. At the end of the accounting period, it is necessary to compare accounts 136 and 336. If there is a difference, it is necessary to find the cause, propose a solution and make timely adjustments.

For example:

The parent company paid supplier A 110,000,000 VND via bank on behalf of the subsidiary.

The parent company accounts as follows:

• Payment: 

Debit account 1368: 110,000,000;

Credit account 112: 110,000,000.

• When receiving money from the subsidiary:

Debit account 112: 110,000,000;
Credit account 1368: 110,000,000.

3. Other receivables

3.1 Concept

Other receivables are other receivables minus trade receivables and internal receivables.

3.2 User account

To reflect other receivables, we use account 138.

3.3 Accounting principles

This account reflects receivables beyond the scope reflected in accounts receivable (131, 136) and the payment status of these receivables, specifically as follows:

• The value of missing assets is discovered but the cause is not yet determined, pending processing;
• Receivables for material and valuable compensation caused by individuals or groups inside and outside the company, specifically: loss of funds and assets of the company, causing damage to the company, there are records of violations and specific solutions;
• Interest, dividends, profits received from financial investments;
• Other receivables except the above…

For example:

At the end of the month, the accountant discovered a shortage of 10,000,000 VND and blamed the cashier, forcing the cashier to compensate for the above amount by deducting it from the salary.

Accounting is as follows:

• Lack of funds: 

Debit account 138: 10,000,000;

Credit account 1111: 10,000,000.

• When there is a compensation settlement record: 

Debit account 334: 10,000,000;

Credit account 138: 10,000,000.

III. Distinguish between short-term receivables and long-term receivables

1. Same

Short-term receivables and long-term receivables are both receivables of enterprises, current assets with relatively high liquidity.

2. Different

 

IV. Some frequently asked questions about receivables