Final answer:
The three main purposes of the AR aged trial balance are to identify outstanding invoices, evaluate credit policies, and aid in debt collection.
Step-by-step explanation:
The three main purposes of the Accounts Receivable (AR) Aged Trial Balance are:
- Identify outstanding invoices: The AR aged trial balance lists all outstanding invoices, organized by the length of time they have been outstanding. This helps businesses track which invoices are overdue and need attention.
- Evaluate credit policies: By analyzing the AR aged trial balance, businesses can identify trends in late payments and assess the effectiveness of their credit policies. This information is crucial for making adjustments and improving cash flow.
- Debt collection: The AR aged trial balance helps businesses prioritize which invoices to pursue for debt collection. By focusing on the most overdue invoices, businesses can increase their chances of recovering outstanding payments.