Accounts receivable is that the amount owed to a corporation resulting from the corporate providing goods and/or services on credit. The term trade receivable is additionally utilized in place of assets .

The amount that the company is owed is recorded in its general ledger account entitled Accounts Receivable. The unpaid balance during this account is reported as a part of the present assets listed on the company's record .

When goods are sold on credit, the vendor is probably going to be an unsecured creditor of its customer. Therefore, the vendor should take care when selling goods on credit.

Good accounting requires that an estimate should be made for any amount in assets that's unlikely to be collected. The estimated amount is reported as a credit balance during a contra-receivable account like Allowance for Doubtful Accounts. This credit balance will cause the quantity of assets reported on the record to be reduced. Any adjustment to the valuation reserve also will affect Uncollectible Accounts Expense, which is reported on the earnings report .