What Does Accounts Receivable Mean?
Accounts receivable is a term referring to the amount of money owed to a business by it’s customers
How it Works
A business will sell goods and services to its customers on credit.
This means the business has allowed them time to pay for the goods or services.
With credit sales, the money owed for these goods or services is recorded in the customer’s account.
A customer is also known as a debtor.
They are called this because they owe a debt to the business.
A business may have many customers.
The total amount owed to the business by customers is known as accounts receivable.
To see how to account for accounts receivable, see ‘Recording Customer Transactions‘