Definition: The Statement of Accounts details all transactions between a company and its customers or vendors over a specified period.
Importance: It enhances transparency in financial dealings, contributing to better customer and vendor relationships.
Usage: Businesses use this statement to track accounts receivable and payable, ensuring timely payments.
Example:
"Sweet Treats" sends a Statement of Accounts to a regular customer, detailing:
- Opening Balance: $200
- Invoices: $1,000 (for three purchased cakes).
- Payments Received: $600
- Closing Balance: $600
The customer reviews this statement to verify their balance and ensure timely payment, strengthening their relationship with the bakery.