Bills receivable in the statement of a Canadian merchant are generally few in number, as practically all his trade paper is discounted, or else left with the bank for collection. With the facilities offered by the banks there is scarcely any object in holding paper in the office. Under these circumstances a large amount of bills receivable, in excess of collection held by the bank, should be looked into, as it probably means an accumulation of past due or worthless paper or else some special transactions which should be disclosed.

Accounts receivable should be inquired into, especially as to the method of allowing for bad and doubtful debts. A distinction is made in the statement between receivables for goods sold and receivables from other sources. Loans to officers, relatives and friends, and other irregular transactions are frequently found in the latter.

Receivables should bear a reasonable ratio to the turnover and goods on hand. This ratio, of course, would vary in different trades according to the terms of sale. A business selling on ninety days' time would naturally show a higher proportion of receivables than a business selling at thirty days.