Difference between revisions of "Account receivable"
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| − | [[Account receivable]] (alternatively known as [[A/R]] or, simply, [[receivable]]; hereinafter, the ''Account'') is an asset that indicates the amount owed to an [[legal entity]]. Usually, but not necessarily, customers owe those amounts and those amounts represent their outstanding balances such as unpaid sales invoices that customers owe to the [[legal entity]]. Anything that is ''receivable'' means that a [[legal entity]] expects to receive money at some point of time. Every | + | [[Account receivable]] (alternatively known as [[A/R]] or, simply, [[receivable]]; hereinafter, the ''Account'') is an asset that indicates the amount owed to an [[legal entity]]. Usually, but not necessarily, customers owe those amounts and those amounts represent their outstanding balances such as unpaid sales invoices that customers owe to the [[legal entity]]. Anything that is ''receivable'' means that a [[legal entity]] expects to receive money at some point of time. |
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| + | Every ''Account'' is listed on special [[financial account]] such as [[Accounts Receivable]] or similar accounts. They are a part of the [[Assets]]. Further, once the customer pays their invoice, the former [[account receivable]] is removed (or [[credit]]ed) from [[Accounts Receivable]] to other accounts such as [[Cash at Bank]]. | ||
Revision as of 19:32, 17 December 2018
Account receivable (alternatively known as A/R or, simply, receivable; hereinafter, the Account) is an asset that indicates the amount owed to an legal entity. Usually, but not necessarily, customers owe those amounts and those amounts represent their outstanding balances such as unpaid sales invoices that customers owe to the legal entity. Anything that is receivable means that a legal entity expects to receive money at some point of time.
Every Account is listed on special financial account such as Accounts Receivable or similar accounts. They are a part of the Assets. Further, once the customer pays their invoice, the former account receivable is removed (or credited) from Accounts Receivable to other accounts such as Cash at Bank.
Definitions
According to College Accounting: A Practical Approach by Slater (13th edition),
- Accounts receivable. An asset that indicates the amount owed by customers.
Related concepts
- Bookkeeping. Recording, filing, and retrieving of financial data, as well as producing those financial reports that are required by laws.
