What is Accounts Receivable and How Does it Work?

Accounts Receivable (AR) is a type of accounting that records the amount of money that a company
is owed by its customers for goods or services sold on credit.
It is an asset account that represents the amount a business is owed by its customers.

AR transactions are recorded in the general ledger as credit entries,
and they are reported on the company's balance sheet as an asset.
This information is also used to prepare financial statements,
such as the balance sheet, that shows the company's financial position and performance.

The process of managing accounts receivable typically includes activities such as
recording customer payments, reconciling customer statements, monitoring outstanding payments,
and collecting overdue amounts.

In summary, Accounts Receivable is a critical component of a company's financial management,
as it helps ensure that the company receives payments from its customers in a timely
and organized manner, and helps maintain good relationships with its customers.