If you were going to prepare the Balance Sheet for the previous month, what would you enter for the Accounts Receivable balance?

If you were going to prepare the Balance Sheet for the previous month, what would you enter for the Accounts Receivable balance?

• A. $5,000
• B. $6,000
• C. $4,500
• D. $3,500

Answer: (C)

Accounts Receivable on the Balance Sheet represents the amount customers still owe at the end of the period. It’s a current asset that increases with credit sales and decreases when customers pay or when debts are written off. When you prepare the Balance Sheet for the previous month, you use the ending balance of Accounts Receivable from that month (and, if applicable, net it against the allowance for doubtful accounts to show net AR). If the ending balance shown for that month is 4,500, that is the number you report as the Accounts Receivable balance. The other figures would reflect different timings or stages of the AR cycle and wouldn’t represent the period-end balance that appears on the balance sheet.

Accounts Receivable on the Balance Sheet represents the amount customers still owe at the end of the period. It’s a current asset that increases with credit sales and decreases when customers pay or when debts are written off. When you prepare the Balance Sheet for the previous month, you use the ending balance of Accounts Receivable from that month (and, if applicable, net it against the allowance for doubtful accounts to show net AR). If the ending balance shown for that month is 4,500, that is the number you report as the Accounts Receivable balance. The other figures would reflect different timings or stages of the AR cycle and wouldn’t represent the period-end balance that appears on the balance sheet.