Definition
Also referred to as "receivables," this is the accounting term used to describe claims the company has against others for goods, services, or money. Accounts receivable are usually non-written promises to pay for goods or services received but not yet paid for by a customer.
Explanation
Accounts receivable appear on the balance sheet as a current asset; and are usually recorded when an invoice has been rendered to the customer. The typical repayment term for customers is 30 to 60 days after the mailing of an invoice.
Related Terms
Also known as a statement of financial position, the balance sheet is used to show the financial health of a company at a particular point in time. The balance sheet consists of assets, liabilities, and owner's equity in the company. It is one of the four key financial statements issued by public companies.
Moneyzine EditorNovember 6th, 2024
The accounting term used to describe an economic resource, which is owned by the corporation and expected to provide future benefits to its operation, is asset. Appearing on the balance sheet, assets are typically broken down into two categories:Moneyzine EditorNovember 6th, 2024
The financial accounting term current assets is generally defined as cash and other assets that can be converted into cash within one year or one operating cycle, whichever is longer. Current assets are a subcategory of assets, which appear on a company's balance sheet.Moneyzine EditorNovember 6th, 2024
The financial accounting term marketable security is used to describe both debt and equity securities held by a company. Marketable securities is a subset of short term investments, as such it appears on the company's balance sheet as a current asset.Moneyzine EditorNovember 6th, 2024
The financial accounting term inventory is used to describe the balance sheet line item that includes the value of raw materials, work in process, finished goods ready for sale, and returned goods that can be resold.Moneyzine EditorNovember 6th, 2024
A document that itemizes the transfer of goods or services between a buyer and seller is known as an invoice. Information appearing on an invoice includes the names of the buyer and seller, price paid, quantities, and date of the transaction.Moneyzine EditorNovember 6th, 2024- The financial accounting term notes receivable refers to the obligations of a customer that is in the form of a promissory note, which is a written promise to pay a fixed sum of money to the company. Notes receivable appear on the balance sheet as a current asset.Moneyzine EditorNovember 6th, 2024
The financial accounting term bad debts expense refers to the portion of revenue a company does not expect to collect from customers. The Matching Principle dictates bad debts are recorded as an expense in the same accounting period in which the sale occurred.Moneyzine EditorNovember 6th, 2024
The term impairment in value is used to describe an event that suddenly and permanently lowers the value of an asset appearing on the company's balance sheet. When this occurs, companies will write-down the asset to the new market value. Accounts typically affected by impairment include goodwill as well as accounts receivable.Moneyzine EditorNovember 6th, 2024
As it applies to the accounting discipline, cash includes paper money, coins, checks, money orders, and money on deposit with banks. In general, an item is classified as cash if a bank will accept it for deposit.Moneyzine EditorNovember 6th, 2024
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