Amounts owed by customers for goods or services already delivered, usually recorded as a current asset until collected.
Accounts receivable is the asset account used for customer balances that arise when a business delivers goods or services before receiving cash. It represents a claim on future payment rather than cash already on hand.
Receivables affect liquidity, revenue realization, credit risk, and working-capital analysis. Weak receivables discipline can overstate collectible assets, delay cash conversion, and hide collection problems that should affect bad-debt estimates.
When a business invoices a customer on credit, it debits accounts receivable and credits revenue or another appropriate account. The balance stays open until cash is collected, a credit memo is issued, or the amount is written off or reserved against.
Detailed customer balances usually sit in an A/R subledger, while the general ledger carries the control total that flows into the balance sheet and trial balance.
A consulting firm bills a client $8,000 after completing a project:
| Account | Debit | Credit |
|---|---|---|
| Accounts Receivable | 8,000 | |
| Service Revenue | 8,000 |
When the client pays:
| Account | Debit | Credit |
|---|---|---|
| Cash | 8,000 | |
| Accounts Receivable | 8,000 |
Accounts receivable is not the same as revenue. Revenue measures what was earned during the period, while accounts receivable is the unpaid customer balance that may remain after revenue has already been recognized.