Nov 4, 2025

Accounts Receivable

• Accounts Receivable (AR) is the money owed to your business by your customers for goods or services you’ve already delivered but haven’t been paid for yet.

How do I remember it?

• Think of "Receivable" = You will RECEIVE money.

If you sold something and are waiting for payment → it’s Accounts Receivable.

If you owe money to someone else → that’s Accounts Payable.

Real world example

• Let’s say you own a small printing shop.

A local restaurant orders $1,000 worth of menus from you and says they’ll pay in 30 days.

You deliver the menus today, but haven’t received the money yet.

You record $1,000 as Accounts Receivable in your books. It’s money the restaurant owes you.

• When the restaurant pays after 30 days, you:

Decrease Accounts Receivable by $1,000

Increase Cash by $1,000