Yes, accounts receivable is considered a current asset, so long as the account balance is expected to be paid within one year of being incurred. Current assets are any assets that can be converted into cash within a period of one year. This includes products that are sold for cash as well as resources that are consumed, used, or exhausted through regular business operations that are expected to provide a cash value return within a single year. Accounts receivable are funds that a company is owed by clients who have received a good or service, but have not yet paid. For these funds to be a current asset, they must be expected to be received within a year. An example of accounts receivable is Google Ads which allows businesses to incur an advertising bill and collect the funds after the ad placements have been used by the business. The outstanding funds waiting to be collected will be included in accounts receivable.
Is Accounts Receivable a Current Asset? FAQs
Yes, accounts receivable are considered a current asset, so long as the account balance is expected to be paid within one year of being incurred.
Current assets are any assets that can be converted into cash within a period of one year.
Accounts receivable are funds that a company is owed by clients who have received a good or service but have not yet paid.
Accounts Receivables are usually presented under the category ‘current assets’ and reported as an amount due from customers for goods sold or services performed in the ordinary course of business.
It means that the company can expect to receive the money from its customers within one year or less from when it was recorded as an account receivable.
True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.
True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.
To learn more about True, visit his personal website or view his author profiles on Amazon, Nasdaq and Forbes.
