Are Accounts Receivable an Asset?
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.