Accounts Receivable

Accounts receivable

Money owed by customers.

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accounts receivable

Money owed to a business by customers who have bought goods or services on credit. Accounts receivables are current assets that continually turn into cash as customers pay their bills. Also called receivables.

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Accounts Receivable

1. Money that a customer owes a company for a good or service purchased on credit. Accounts receivable are current assets for a company and are expected to be paid within a short amount of time, often 10, 30, or 90 days. See also: Collection period.

2. A unit within a company's accounting department that deals with accounts receivable.

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Accounts Receivable (AR)

What Does Accounts Receivable (AR) Mean?

Money owed by customers (individuals or corporations) to vendors in exchange for goods or services rendered. Receivables usually come in the form of operating lines of credit and are usually due within a relatively short period, ranging from a few days to a year. On a balance sheet, AR often is recorded as an asset because it represents cash legally owed by a customer.

Investopedia explains Accounts Receivable (AR)

When a company has receivables, that means that it has made a sale but has not collected the money from the purchaser yet. Most companies operate this way. This allows frequent customers to avoid the hassle of making cash payments for each transaction. In other words, the company receives an IOU for goods or services rendered. People have ARs as well in the form of a monthly or biweekly paycheck. It's the company's IOU for services (work) rendered. ARs are the opposite of APs (accounts payables).

Related Terms:
• Accounts Payable—AP
• Accrual Accounting
• Asset
• Balance Sheet
• Receivables Turnover Ratio