Accounts Receivable
Accounts Receivable refers to money that a company is owed by its customers for goods or services delivered but not yet paid for. When a business sells something on credit, it records this amount as an asset on its balance sheet. Essentially, it represents a promise from customers to pay in the future. Efficient management of accounts receivable is crucial for maintaining cash flow, ensuring the business can meet its own financial obligations. In summary, it's the money a company expects to receive from its customers soon.
Additional Insights
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Accounts receivable refers to the money owed to a business by its customers for goods or services already delivered but not yet paid for. Essentially, when a company sells something on credit, it records this amount as accounts receivable in its financial statements. This is important because it represents future cash inflow and indicates how well a business manages its cash flow and credit policies. Proper management of accounts receivable is crucial for maintaining healthy financial operations, as it affects liquidity and the overall financial health of a company.