Accounts Receivable — Core Concepts
10 topics covering the full AR cycle from recording credit sales to internal controls. Click any card to expand.
Accounts Receivable (AR) represents amounts owed to the business by customers for goods or services delivered on credit — not yet collected. It sits on the Balance Sheet under Current Assets.
AR vs. Notes Receivable
| Feature | Accounts Receivable | Notes Receivable |
|---|---|---|
| Documentation | Open account / invoice | Formal promissory note |
| Term | 30–90 days typically | Specific maturity date |
| Interest | Interest-free (usually) | Usually bears interest |
| Formality | Informal | Formal legal instrument |
Role in the Operating Cycle
Cash → Inventory → Sales on Account (AR created) → Collections → Cash. The credit cycle involves credit approval, delivering goods, issuing an invoice, monitoring collections, and recording the cash receipt when payment arrives.
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