On financial records, accounts receivable means money that is due to be paid by customers (i.e., billed to customers, but not yet received). Note that even though the company may not have received the cash within the accounting period, accounts receivable is still considered revenue (accrual basis of accounting); further cash payments associated with existing accounts receivable will not affect revenue.
Scenarios
- ”Billed customer for $x”
- debit accounts receivable by $x
- credit revenue by $x
- ”Collected $x from customers on account”
- debit cash by $x
- credit accounts receivable by $x