Accounts receivable are classified as current assets on a company's balance sheet, as they are expected to be collected within a relatively short period, typically within one year. Accounts receivable are created when a business sells goods or services to a customer on credit terms. Accounts Receivable (AR) represents the credit sales of a business, which have not yet been collected from its customers. Companies allow their clients to pay for goods and services over a reasonable extended period of time, provided that the terms have been agreed upon. Accounts receivable (AR) is an item in the general ledger (GL) that shows money owed to a business by customers who have purchased goods or services on credit. AR is the opposite of accounts payable, which are the bills a company needs to pay for the goods and services it buys from vendors. Accounts receivables is the money owed to a business by clients for which the business has given services or delivered a product but has not yet collected payment.
