What is an Accounts Receivable Ledger?

Alexis W.

An accounts receivable ledger is a book or document that contains a list of all of the outstanding money a person or company is owed. This means it is a book where the company keeps a list of all the people it has sold products to on credit. After a company makes a sale and sends a bill or invoice, that account is considered an account receivable.

The money owed to a business is generally recorded in an accounts receivable ledger.
The money owed to a business is generally recorded in an accounts receivable ledger.

Accounts receivable are considered current assets on the balance sheet. This means they go toward a valuation of a company's assets. If a company is owed a total of $5,000 US Dollars (USD) for all outstanding bills that have not been paid, all of the transactions adding up to that $5,000 USD would be listed in the accounts receivable ledger.

Such ledgers are important for several reasons. First, an accounts receivable ledger allows a company to keep track of all its assets. Thus, when it does an accounting of assets and liabilities, it has a list of all the money owed in one place.

An accounts receivable ledger is also important because it allows a company to access whether debts are being paid and whether it has too many outstanding debts. If an account listed in the ledger is not paid on time, the company can see this easily because of the entry in the ledger and can send a reminder notice or a follow-up bill.

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Companies enter accounts into the ledger at different times depending on their financial recording methods. Most companies enter an account receivable into the ledger when the bill or invoice has been sent. Some enter the debt into the ledger when the sale is made.

Ledgers can also be kept in different forms. With the advance of technology, it has become more common for ledgers to be kept in electronic form. Computer programs allow both customers and individuals to keep track of all the accounts receivable by entering them into simple computer programs and populating form fields.

Ledgers can also be kept in old fashioned books using the paper and pencil method. Some companies may still keep their books in this manner. Ledger books are still sold that allow easy tracking of accounts receivable using traditional methods.

A book keeper or accounting department is traditionally vested with the responsibility of updating the accounts receivable ledger in most companies. Data from the ledger can then be transferred from the ledger to the balance sheet so the company can get an updated valuation of its assets. Commonly, companies will update their balance sheets with information from the ledger quarterly, although updating the balance sheet monthly is also common.

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