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Understanding Revenue with the use of Control Accounts.
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Revenue Part 2
Understand the use of Control Accounts.
When to use
When constructing a basic financial model.
A control account is no more than a reconciliation of how a balance sheet varies from one period to the next.
- Assuming the last period’s Balance Sheet accounts receivable number was $120,000, the Balance Sheet cannot help but balance if we show:
- a P&L Sales figure of $64,700
- a cash receipt of $82,740 in the Cash Flow Statement
- re-state the receivables balance to $101,950 on the Balance Sheet
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