Which of the following best describes accounts receivable?

Accounts receivable refers to the amount of money that is owed to a business by its customers for goods or services that have been provided but not yet paid for. This means that when a company sells products or services on credit, the total amount that customers owe becomes accounts receivable. It is considered an asset on the balance sheet because it represents future cash inflows that the company expects to collect.

This concept is critical for understanding a company's liquidity and cash flow management. The distinction is important because accounts receivable is not immediate cash but it is cash that is expected to be received in the future, making it a key part of financial analysis for businesses. This definition clarifies the role of accounts receivable in financial planning and reporting.