What is Accounts receivable (AR)?

Accounts receivable (AR) is the money owed to a business by customers for goods or services not yet paid for. Accounts receivable is recorded as an asset because it represents future cash the business expects to collect.

Example: A consulting firm sends a client a $2,000 invoice due next month. The invoice is recorded as accounts receivable until payment is received.

Related terms: Accounts Payable, Invoice, Revenue, Assets