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When a company is owed for sales made to customers on credit, the asset called Accounts Receivable will be reported on the balance sheet.
What is the meaning of accounts receivable?
- The money clients owe your business for goods or services for which invoices have been issued is known as accounts receivable. On the balance sheet, current assets are listed as the total amount of all accounts receivable, including bills from clients for goods or services on credit.
- An electric firm that invoices its customers after they use the electricity is an example of an accounts receivable. The electric company keeps track of unpaid invoices as an account receivable while it waits for its clients to make payments.
- By adding up the beginning and ending amounts of your accounts receivable over a period of time and dividing by 2, you can also get the average amount of accounts receivable.
- The number of money clients owe a company for goods or services already rendered is measured by accounts receivable. Investors can better understand a company's overall financial stability and liquidity by looking at its accounts receivable.
When a company is owed for sales made to customers on credit, the asset called Accounts Receivable will be reported on the balance sheet.
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