A type of asset
listed on a company's balance sheet
. Types of AR include the following:
- Outstanding accounts due for services rendered. This means that when a company performs a service, but hasn't received payment yet, they record income anyway, and the debt is listed as an asset under accounts receivable. These accounts, by the way, are usually subdivided into categories according to their age. Usually something like 30 day, 60 day, and 90 day accounts (this is done so the company can estimate how much of the total AR balance they can actually expect to receive. Generally only 50% of accounts more than 90 days overdue are ever collected).
- Revolving credit accounts. Citibank lists all those credit card accounts as accounts receivable, along with the interest accruing on the account.
- Loans on contracts having cash value. If you borrow against your life insurance policy with, say, Allstate, Allstate then lists the loan, along with all interest earnings, as an account receivable.
- Mortgages, home-equity lines, mobile home loans, and all types of installment loans are a type of account receivable.
Accounts receivable are, of course, the opposite of accounts payable
, which would be all bills, installment loans, and debts which the company owes (having already received the corresponding services) but hasn't paid yet.
In larger companies, the accounting department is divided into several positions (or departments!) which handle specific areas of the income statement and balance sheet. AR and AP are two of them, and the employees in them, when not just generically called accountants, are called AR clerks and AP clerks. Godawful job really, did AP for one summer and hated it, but hurray for the folks who can do that sort of thing.