What is Accounts Receivable for Accounting?

Also simply called Receivables, the Accounts Receivable line on a General Ledger will contain the amounts owed to the company which are due to be received in the near future.

If a company offers financing for the items it sells, or it has regular payments coming in for things such as rent, leases, monthly subscription or membership fees, and so on, they will have substantial numbers in their accounts receivable.

The money on these lines has not been received yet, but is often used as a cash-equivalent amount if the receivables have an established payment history and the term until they are paid is within the current fiscal quarter.

The documentation of what’s owed to the company often takes the form of an invoice. Good records and documentation must be kept of what’s owed to the company in case there is a default on an obligation.