Accounts receivable
Accounts Receivable
Accounts Receivable (pronunciation: /əˈkaʊnts rɪˈsiːvəbəl/) is a term used in bookkeeping and financial accounting to refer to the money owed to a company by its customers.
Etymology
The term "Accounts Receivable" originates from the practice of recording such debts in an account in the company's books. The term is often abbreviated as AR or A/R.
Definition
Accounts Receivable is an asset account on the balance sheet that represents the amounts that customers owe to a business for the purchase of goods or services on credit. These are usually short-term debts that are due within one year.
Related Terms
- Invoice: A document issued by a seller to a buyer that specifies the amount and cost of products or services that have been provided by the seller.
- Credit: An agreement where a buyer is allowed to pay for goods or services at a later date.
- Debtor: A person or company that owes money.
- Creditor: A person or company to whom money is owed.
- Bad debt: A debt that is not collectible and therefore worthless to the creditor.
- Aging of accounts receivable: A periodic report that categorizes a company's accounts receivable according to the length of time an invoice has been outstanding.
See Also
External links
- Medical encyclopedia article on Accounts receivable
- Wikipedia's article - Accounts receivable
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