Account Receivable
- Accounts receivable (AR) is an asset account on the balance sheet that represents money due to a company in the short term.
- Accounts receivable is created when a company lets a buyer purchase their goods or services on credit.
- Accounts payable is similar to accounts receivable, but instead of money to be received, it is money owed.
- The strength of a company’s AR can be analyzed with the accounts receivable turnover ratio or days sales outstanding.
- A turnover ratio analysis can be completed to expect when the AR will be received.
Accounts receivable (AR) is the balance of money due to a firm for goods or services delivered or used but not yet paid for by customers. Accounts receivable is listed on the balance sheet as a current asset. Any amount of money owed by customers for purchases made on credit is AR.