Accounts Receivable

What is accounts receivable?

Accounts Receivable Definition: Accounts receivable is a person, company, or party, usually a customer, who owes payment for goods or services received from a company or service provider. This occurs when a customer purchases an item or a specific service on credit, where the amount owing is to be paid or settled later.

Until this time, the customer account is recorded as a receivable, which is tracked in a business’s accounting system as money owing to the company. It is listed as an asset account, as when the funds are received, they are recorded are earned revenue. Many companies with credit options offer terms of payment, such as within 30 days, with an incentive to reduce a price or fee if paid sooner.

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