Accounts receivable are amounts that a business owes to others

Question

Account receivables are amounts that a business owes to others is it true or false

Answer 1

Hello Yashwanth,

This answer is false. Accounts Receivable are funds owed to a business for products or services provided to others. These Accounts Receivable can be collected later or sold if the firm needs cash before the collections are due from customers. While other types of receivables can appear on a firm’s balance sheet, the category Accounts Receivable is generally reserved for amounts owed to the firm for the business they provided to clients. Accounts Receivable are typically reported, net (after subtracting) any possible Bad Debt, as the firm might not be able to collect the entire balance.

Answer 2

Accounts receivables is what other entities owes the business. Although they are recognized as revenue, a cash payment has not been received yet.

Answer 3

False, Accounts receivable are amounts a business is owed for products or services provided on account. It is listed as an asset in the balance sheet.

When a product is sold on account accounts receivable is debited and sales revenue is credited for the same amount