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Glossary -> Accounts receivable

Accounts Receivable

Accounts receivable (A/R) are amounts owed to a business by their customers. On the balance sheet of the business, the accounts receivable balance is included in current assets.

The general ledger account for accounts receivable is used to record all A/R transactions. These transactions will also be recorded in the A/R subsidiary ledger (subledger), which tracks the balances for each customer.

When accounting software is used, the A/R subledger is used to produce reports at the end of each month, showing the amounts receivable from each customer, and the "age" of these amounts. The software can usually also produce statements to be mailed to each customer, and can calculate and record interest charges on overdue amounts, to be added to the customer statement.