Is Accounts Receivable an Asset? | F&A Glossary (2024)

FAQs

Is accounts receivable considered an asset? ›

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.

Accounts receivable is an accounting term that refers to sales for which payment has not yet been received. The customer has not paid for the good or service received at the time of the transaction.

Is accounts receivable an asset? Yes, accounts receivable is an asset, because it's defined as money owed to a company by a customer.

Class III: Accounts Receivables

These assets are not normally included in the purchase. The seller normally retains ownership of the accounts receivable as of the closing date, and the buyer receives the outstanding payments and remits them to the seller post-closing.

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 count as an asset because the amount owed to the company should be converted to cash later. The money can then be used to pay expenses or purchase more inventory. It can also be reinvested back into the business.

On this page you'll find 6 synonyms, antonyms, and words related to account receivable, such as: arrears, balance due, debt, bill, invoice, and receivable.

What type of account is accounts receivable? Accounts receivables, listed as a current asset, signify money owed by customers for provided goods or services. Displayed on the balance sheet under current assets, it affects a company's liquidity and working capital.

Some business owners might simply call them debts, receivables for short, or a line of credit.

Put simply, accounts receivable counts as an asset because the amount owed to the company will be converted to cash later. More receivables = more cash, which leads to the growth of the business, over time.

What are the GAAP rules for accounts receivable? ›

According to US GAAP, the company's accounts receivable balance must be stated at “net realizable value”. In basic terms, this just means that the accounts receivable balance presented in the company's financial statements must be equal to the amount of cash they expect to collect from customers.

When you send an invoice to a customer, you enter it as a journal entry to the accounting journal. For the journal entry, you can document the total amount due from the invoice as a debit in the accounts receivable account. You also list the total amount due from the invoice as a credit in the sales account.

Assets can be broadly categorized into current (or short-term) assets, fixed assets, financial investments, and intangible assets.

Bills receivable are assets to the company. Bills payable are liabilities to the company.

An account receivable is an asset recorded on the balance sheet as a result of an unpaid sales transaction, explains BDC Advisory Services Senior Business Advisor Nicolas Fontaine.

Receivables can be classified into accounts/trade receivable, notes receivable, and other receivables.

Accounts payable vs. accounts receivable are opposites, where accounts payable is money a business owes its suppliers and accounts receivable is money owed to the business (typically by customers).