• Accounts receivable is the asset account on the balance sheet, which represents the money owed to the company in the short term.
  • Accounts receivable occurs when a company allows a customer to purchase its goods or services on credit.
  • Accounts payable is similar to accounts receivable, but instead of money to be received, it is money to be received.
  • The strength of a company’s AR can be analyzed using the accounts receivable turnover ratio or sales days.
  • Turnover ratio analysis can be completed to have an idea of when the AR will actually be received.