Is Accounts Receivable an Asset?

Written by True Tamplin, BSc, CEPF®

Updated on December 31, 2022

Yes, accounts receivable is an asset for accounting purposes. Accounts receivable is an amount owed to a business from a company selling their product or service to a customer on credit.

Because an asset is “a resource that provides economic value,”and accounts receivable will soon be converted to cash which has economic value, accounts receivable is considered an asset on a company’s balance sheet.

Accounts receivable are funds that a company is owed by clients who have received a good or service, but have not yet paid. For these funds to be a current asset, they must be expected to be received within a year.

An example of accounts receivable is Google Ads which allows businesses to incur an advertising bill and collect the funds after the ad placements have been used by the business.

The outstanding funds waiting to be collected will be included in accounts receivable.

FAQs

Is Accounts Receivable An Asset?

Yes, accounts receivable is an asset for accounting purposes.

What is Accounts Receivable?

Accounts receivable is an amount owed to a business from a company selling their product or service to a customer on credit.

Is Accounts Receivable a current asset?

For accounts receivable to be a current asset, they must be expected to be received within a year.

What is an example of Accounts Receivable?

An example of accounts receivable is Google Ads which allows businesses to incur an advertising bill and collect the funds after the ad placements have been used by the business.

Why is Accounts Receivable considered an asset on the balance sheet?

Because an asset is “a resource that provides economic value,” and accounts receivable will soon be converted to cash which has economic value, accounts receivable is considered an asset on a company’s balance sheet.

About the Author

True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website, view his author profile on Amazon, or check out his speaker profile on the CFA Institute website.