Is Accounts Receivable a Material Component of a Company’s Total Current Assets?

Yes, accounts receivable is a material component of a company’s total current assets.

A current asset is any asset that will provide an economic benefit for or within one year. To be “material” means that it has a value significant enough to be worth noting for accounting purposes. Since accounts receivable will be converted into cash within one year and has a noteworthy value, it is a material current asset.

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