Don't Forget That Accounts Receivable Is A Liability.

stay structure When we are in the financial guarantee system, we must never forget that accounts receivable is a liability.

Prepaid accounts refer to the amount of advance payments made to the purchasing units or labor receiving units according to the contract stipulations, such as deposits or deposits, prepaid rent or interest when receiving sales orders. Although the enterprises have received these payments, they can not be recognized as income because the enterprises do not actually provide the goods or services, but rather as a liability which is included in the balance sheet and is a current liability.

Taking property as an example, it is easy to understand. The pre account receivable refers to the developer's advance payment of the house purchase according to the contract stipulations, and the development and construction funds of the commissioned units. It is an important way for developers to raise funds for development. In the real estate market prospects, general investment home buyers and institutions will show great enthusiasm for pre-sale buildings. This is because they only need to pay a small amount of capital in advance to enjoy the added value of real estate in the coming period. For developers, pre-sale can raise the necessary construction funds and transfer some market risks to buyers, though they may lose some future interests, but they are negligible relative to the overall interests. however The pre-sale buildings will have certain specific restrictions in different countries or regions. In many parts of our country, the local government has some provisions on the actual investment amount before the developer's pre-sale, for example, the state stipulates that the total investment of the developer exceeds 25%, and has determined the construction progress and the completion date of delivery, so that the pre-sale can be made. Therefore, developers can not think that without a penny, empty handed will be able to make real estate, and get a huge return.

just like Developers Similarly, many of our enterprises will take pre account receivable as their own money, spend money freely, or even turn the advance accounts into a "moat" that regulates profits. In fact, these behaviors are very dangerous. It is a great hidden danger for enterprises to construct financial guarantee system.