What does Debtors Aging Analysis show?

The Debtors Aging Analysis is a critical tool used in accounting to manage and monitor a company's receivables. It provides a detailed breakdown of the amounts owed by customers (debtors) and categorizes these amounts based on how long they have been outstanding. This categorization typically includes ranges such as current, 1-30 days overdue, 31-60 days overdue, and so on.

By presenting this information, the analysis helps businesses identify which debts are overdue, allowing them to take appropriate action, such as sending reminders or taking further steps to collect outstanding amounts. It is crucial for assessing the liquidity of the business and understanding customer payment behavior. This analysis plays a significant role in ensuring that cash flow remains healthy by indicating which accounts require immediate attention.

The other options do not accurately describe what the Debtors Aging Analysis entails. For instance, a summary of total sales focuses on revenue generation rather than outstanding debts, while a report on cash transactions relates to actual cash flow rather than receivables. Similarly, a comparison of current and previous debts does not provide the detailed overdue status necessary for effective credit management. Thus, the accurate choice clearly aligns with the purpose and utility of the Debtors Aging Analysis.