What is the meaning of Accounts Receivable?

Accounts receivable are the due invoices for a company or the payments which the company has to receive from its clients who have purchased its goods and services on credit. The credit period is usually short and stretches from a few days to months. When the customers buy products from a company on credit, the sale does materialise when the invoice is generated. However, the company extends the period of payment for the customers up to few months. Accounts receivable are categorized as current assets on the balance sheet. The amount under it is subject to the line of credit which the customer has from the company. These are generally offered to regular customers.

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