Accounts Receivable
What Does Accounts Receivable Mean?
Accounts receivable is a term referring to the amount of money owed to a business by it’s customers
![acrec1](https://seeaccountingnow.online/wp-content/uploads/2020/04/acrec1.jpg)
How it Works
A business will sell goods and services to its customers on credit.
![](https://seeaccountingnow.online/wp-content/uploads/2020/04/acrec2.jpg)
This means the business has allowed them time to pay for the goods or services.
![](https://seeaccountingnow.online/wp-content/uploads/2020/04/acrec3.jpg)
With credit sales, the money owed for these goods or services is recorded in the customer’s account.
![](https://seeaccountingnow.online/wp-content/uploads/2020/04/acrec4.jpg)
A customer is also known as a debtor.
![](https://seeaccountingnow.online/wp-content/uploads/2020/04/acrec5.jpg)
They are called this because they owe a debt to the business.
![](https://seeaccountingnow.online/wp-content/uploads/2020/04/acrec6.jpg)
A business may have many customers.
![](https://seeaccountingnow.online/wp-content/uploads/2020/04/acrec7.jpg)
The total amount owed to the business by customers is known as accounts receivable.
![acrec8](https://seeaccountingnow.online/wp-content/uploads/2021/06/acrec8.jpg)
To see how to account for accounts receivable, see ‘Recording Customer Transactions‘
© R.J. Hickman 2020