Revenue Accounts Receivable Meaning

Accounts receivable is the amount owed to a seller by a customer as such it is an asset since it is convertible to cash on a future date accounts receivable is listed as a current asset in the balance sheet since it is usually convertible into cash in less than one year.

Revenue accounts receivable meaning. Accounts receivables are created when a company lets a buyer purchase their. Accounts receivable ar is the proceeds or payment which the company will receive from its customers who have purchased its goods services on credit usually the credit period is short ranging from few days to months or in some cases maybe a year. Accounts receivable is money that your customers owe you for buying goods and services on credit. Accounts receivable is an asset account not a revenue account.

However under accrual accounting you record revenue at the same time that you record an account receivable. If the receivable amount only converts to cash in more than one year it is instead recorded as a long term asset on the. Accounts receivable is an asset account on the balance sheet that represents money due to a company in the short term. Accounts receivable are recorded as an asset on your company s balance sheet.