{"id":20783,"date":"2019-08-15T21:52:59","date_gmt":"2019-08-16T02:52:59","guid":{"rendered":"https:\/\/breakingintowallstreet.com\/biws\/?post_type=biws_kb&#038;p=20783"},"modified":"2024-08-01T19:11:15","modified_gmt":"2024-08-02T00:11:15","slug":"accounts-receivable-on-the-3-financial-statements","status":"publish","type":"biws_kb","link":"https:\/\/breakingintowallstreet.com\/kb\/accounting\/accounts-receivable-on-the-3-financial-statements\/","title":{"rendered":"Accounts Receivable on the 3 Financial Statements (11:19)"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_81 counter-flat ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Accounts Receivable on the 3 Financial Statements<\/p>\n<span class=\"ez-toc-title-toggle\"><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/breakingintowallstreet.com\/kb\/accounting\/accounts-receivable-on-the-3-financial-statements\/#Accounts_Receivable_on_the_3_Financial_Statements\">Accounts Receivable on the 3 Financial Statements<\/a><\/li><li class='ez-toc-page-1'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/breakingintowallstreet.com\/kb\/accounting\/accounts-receivable-on-the-3-financial-statements\/#3_What_happens_when_AR_goes_up_%E2%80%93_record_revenue_and_profit_but_no_cash_received_yet%E2%80%A6_so_cash_goes_down\">3. What happens when AR goes up &#8211; record revenue and profit, but no cash received yet&#8230; so cash goes down!<\/a><\/li><li class='ez-toc-page-1'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/breakingintowallstreet.com\/kb\/accounting\/accounts-receivable-on-the-3-financial-statements\/#4_What_happens_when_AR_then_goes_down_after_youve_collected_the_cash_%E2%80%93_no_changes_on_IS_but_cash_now_INCREASES_to_reflect_the_collection_AR_decreases_and_other_side_balances_via_Retained_Earnings\">4. What happens when AR then goes down after you&#8217;ve collected the cash &#8211; no changes on IS, but cash now INCREASES to reflect the collection, AR decreases, and other side balances via Retained Earnings.<\/a><\/li><\/ul><\/nav><\/div>\n\n<h2><span class=\"ez-toc-section\" id=\"Accounts_Receivable_on_the_3_Financial_Statements\"><\/span>Accounts Receivable on the 3 Financial Statements<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Here&#8217;s an outline of what we cover in this free tutorial:<br \/>\n1. Why This Question Matters<br \/>\nThis one is both a &#8220;real world&#8221; scenario, AND a very common question in interviews.<br \/>\n2. What is Accounts Receivable (&#8220;AR&#8221;)?<br \/>\nLine item on Balance Sheet for cash that you still need to collect from customers.<\/p>\n<p>Recorded it as revenue, but haven&#8217;t received the cash payment from them yet (Like an &#8220;IOU&#8221;).<\/p>\n<p>Sent invoice and delivered product, but still waiting on payment from customer.<\/p>\n<p>(Standards differ a bit by company and industry, but that&#8217;s the basic idea)<\/p>\n<style>.enteremail__large--inline{margin:60px auto!important}<\/style>\n<div class='code-block code-block-2' style='margin: 8px 0; clear: both;'>\n<div class=\"kb-adinsert-modal\">\n    <div class=\"kb-adinsert-top\">\n      <div class=\"media\">\n          <img decoding=\"async\" class=\"alignnone size-full wp-image-28448\" src=\"https:\/\/biwsuploads-assest.s3.amazonaws.com\/biws\/wp-content\/uploads\/2024\/04\/24164120\/adv-fm-tile.png\" alt=\"PowerPoint Pro\" width=\"128\" height=\"128\" \/>\n      <\/div>\n      <div class=\"content\">\n          <h3>Master Financial Modeling for Investment Banking With <strong>BIWS Core Financial Modeling<\/strong><\/h3>\n      <\/div>\n    <\/div>\n    \n    <div class=\"full_text\">\n    \t<ul>\n        \t<li>\n            \t<h4>Become a financial modeling pro<\/h4>\n              <p>158 videos, detailed written guides, Excel files, quizzes, and more<\/p>\n\t\t\t    <\/li>\n          <li>\n          \t<h4>Complete 10+ detailed global case studies<\/h4>\n            <p>These include both the theory and the practical applications<\/p>\n\t\t\t    <\/li>\n          <li>\n          \t<h4>Prepare for your internship or full-time job<\/h4>\n            <p>Gain the skills you need to \u201chit the ground running\u201d on Day 1\n\n<\/p>\n\t\t\t  <\/li>\n      <\/ul>\n        \n      <a class=\"cta-link orange-button-medium\" href=\"https:\/\/breakingintowallstreet.com\/core-financial-modeling\/\" target=\"_blank\">Full Details<\/a>\n      \n      <a class=\"cta-link orange-button-medium bg-blue\" href=\"https:\/\/biws-support.s3.us-east-1.amazonaws.com\/Course-Outlines\/Core-Financial-Modeling-Course-Outline.pdf\" target=\"_blank\" rel=\"noopener\">Short Outline<\/a>\n    <\/div>\n<\/div><\/div>\n\n<h2><span class=\"ez-toc-section\" id=\"3_What_happens_when_AR_goes_up_%E2%80%93_record_revenue_and_profit_but_no_cash_received_yet%E2%80%A6_so_cash_goes_down\"><\/span>3. What happens when AR goes up &#8211; record revenue and profit, but no cash received yet&#8230; so cash goes down!<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Intuition: Recorded paper profit that you haven&#8217;t actually gotten in cash yet&#8230;<\/p>\n<p>But those taxes you pay on that profit ARE in cash!<\/p>\n<p>So you&#8217;re paying extra taxes for profit you don&#8217;t have yet, which reduces your cash.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"4_What_happens_when_AR_then_goes_down_after_youve_collected_the_cash_%E2%80%93_no_changes_on_IS_but_cash_now_INCREASES_to_reflect_the_collection_AR_decreases_and_other_side_balances_via_Retained_Earnings\"><\/span>4. What happens when AR then goes down after you&#8217;ve collected the cash &#8211; no changes on IS, but cash now INCREASES to reflect the collection, AR decreases, and other side balances via Retained Earnings.<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Intuition: AR &#8220;going down&#8221; means a cash collection has taken place&#8230; but the revenue, profits, and taxes you&#8217;ve recorded don&#8217;t change.<\/p>\n<p>So all you do is REMOVE the cash decrease on the CFS&#8230;<\/p>\n<p>And cash on the Balance Sheet is now up, with Retained Earnings up on the other side to balance it.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>What is Accounts Receivable (&#8220;AR&#8221;)? Why This Question Matters? What happens when AR goes up? What happens when it goes down?<\/p>\n","protected":false},"featured_media":21897,"template":"","class_list":["post-20783","biws_kb","type-biws_kb","status-publish","has-post-thumbnail","hentry","kb_category-accounting"],"acf":[],"_links":{"self":[{"href":"https:\/\/breakingintowallstreet.com\/wp-json\/wp\/v2\/biws_kb\/20783","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/breakingintowallstreet.com\/wp-json\/wp\/v2\/biws_kb"}],"about":[{"href":"https:\/\/breakingintowallstreet.com\/wp-json\/wp\/v2\/types\/biws_kb"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/breakingintowallstreet.com\/wp-json\/wp\/v2\/media\/21897"}],"wp:attachment":[{"href":"https:\/\/breakingintowallstreet.com\/wp-json\/wp\/v2\/media?parent=20783"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}