Accounts Receivable
Definition
Accounts Receivable (A/R) is money customers owe the business for work or products the business has already provided. It is an asset on the Balance Sheet.
Example
Northstar Creative sends a customer a $2,000 invoice today. The customer will pay next month. Until the customer pays, the $2,000 is Accounts Receivable.
Why It Matters
A/R tells the bookkeeper how much customers still owe and helps identify overdue or incorrectly applied payments.