Ar Accounts Receivable Definition

Accounts receivable are amounts a company has earned from customers but has not yet collected. The accounts receivable definition includes all short-term customer debt owed to a company.

In other words, accounts receivable represents money that is owed to a company by its customers for goods or services that have been delivered or used, but not yet paid for. To record accounts receivable, businesses use a ledger, which is a type of accounting record keeping software.

Accounts receivable are considered an asset on a company’s balance sheet because they represent future earnings. However, because they are also debts that must be repaid, they are sometimes referred to as ‘negative assets.’

While the terms ‘accounts receivable’ and ‘revenue’ are often used interchangeably, there is a key difference between the two: revenue is the total amount of money earned by a company, while accounts receivable only represents the portion of that revenue that has not yet been collected.