Can someone please throw some light on differences between cash billed and cash received. This is extension of discussion at the following link: http://www.analystforum.com/phorums/read.php?11,665678 Billing and cash received shouldn’t be equal ? What exactly does billing mean and why it’s not equal to cash received ? Thanks again
billing is what I ask clients to pay, cash received is what clients actually paid, may less what I asked. the less part is account receivable.
Thansk Annexguy. So is this the reason why we use billing for calculating liabilities instead of actual cash flow from client (I am referring to the same discussion)
billing affects your balance sheet, cash doesn’t. Revenue is recognized when earning proces is completed and payment is assured (it doesn’t say anywhere about cash). Therefore, when your company is recognizing revenue and billing someone the amount appears on the balance sheet as A/R. As you receive cash the whole amount of A/R or its portion moves to cash. That doesn’t change current assets, assets, current liabilities, liabilities.