Accounts receivable is classified as what on financial records?

Unlock all questions

This demo includes only 20 questions. Upgrade to access hundreds of questions, flashcards, exam simulations, and disable ads.

Full question bankExam simulationsFlashcards
From $24.99Unlock all

Prepare for the Tracking Assets and Sales Test with comprehensive flashcards and multiple choice questions. Understand each concept with clear hints and explanations. Ace your exam confidently!

Multiple Choice

Accounts receivable is classified as what on financial records?

Explanation:
Accounts receivable represents amounts customers owe you for sales made on credit. Because it will bring cash into the business in the future and is controlled by the company from past transactions, it is classified as an asset on the balance sheet. It’s typically a current asset since collection usually happens within a short period. It isn’t a liability, revenue, or equity. In practice, you record a sale on credit by debiting Accounts Receivable and crediting Revenue; when you collect cash, you debit Cash and credit Accounts Receivable. Some receivables may be adjusted for doubtful accounts, reducing the asset to its net realizable value.

Accounts receivable represents amounts customers owe you for sales made on credit. Because it will bring cash into the business in the future and is controlled by the company from past transactions, it is classified as an asset on the balance sheet. It’s typically a current asset since collection usually happens within a short period. It isn’t a liability, revenue, or equity. In practice, you record a sale on credit by debiting Accounts Receivable and crediting Revenue; when you collect cash, you debit Cash and credit Accounts Receivable. Some receivables may be adjusted for doubtful accounts, reducing the asset to its net realizable value.

More Multiple Choice Questions
Subscribe

Get the latest from Examzify

You can unsubscribe at any time. Read our privacy policy