Accounts Receivable is the money owed to a business by its customers for goods or services that have been delivered or used, but not yet paid for. It is an asset on the balance sheet of a business and is recorded as a current asset.
Accounts receivable is a term used to describe money owed to a business by its customers. It is a type of asset that is created when a customer purchases goods or services on credit. Accounts receivable is an important part of a business’s financial health, as it is a source of income that can be used to pay for expenses and other obligations.
Accounts receivable is typically recorded in a company’s general ledger and is reported on the balance sheet as an asset. The accounts receivable balance is the total amount of money owed to the business by its customers. This balance is typically broken down into individual customer accounts, which are tracked separately.
When a customer purchases goods or services on credit, the business will typically issue an invoice to the customer. This invoice will include the amount due, the due date, and any applicable terms and conditions. The customer is then expected to pay the invoice by the due date. If the customer fails to pay the invoice by the due date, the business may take steps to collect the debt, such as sending a reminder letter or making a phone call.
When a customer pays an invoice, the business will record the payment in its accounts receivable ledger. This ledger will track the amount of money owed to the business by each customer. The accounts receivable ledger is also used to track any discounts or other adjustments that may be applied to the customer’s account.
Accounts receivable is an important part of a business’s financial health. It is a source of income that can be used to pay for expenses and other obligations. It is also important to track accounts receivable in order to ensure that customers are paying their invoices on time. By doing so, businesses can ensure that they are receiving the money they are owed in a timely manner.