How to calculate cash collections?
Understand the Problem
The question is asking how to determine the total amount of cash that has been collected by a company during a specific period. This involves understanding the methods of tracking incoming cash flows from various sources such as sales, accounts receivable collections, etc.
Answer
(Beginning Accounts Receivable + Credit Sales) - Ending Accounts Receivable
The final answer is: Cash Collections = (Beginning Accounts Receivable + Credit Sales) - Ending Accounts Receivable.
Answer for screen readers
The final answer is: Cash Collections = (Beginning Accounts Receivable + Credit Sales) - Ending Accounts Receivable.
More Information
Cash collections represent the cash a company collects from its customers through sales over a period of time. This metric is critical for understanding a company's liquidity and financial health.
Tips
A common mistake is not gathering accurate beginning and ending balances for Accounts Receivable, which can lead to incorrect calculations.
Sources
- Cash collections in accounting explained - brixx.com
- How To Calculate Cash Collections From Accounts Receivable - versapay.com
- What is Cash Collections Formula Definition - Emagia - emagia.com
