Account Receivable Example

An accounts receivable example involves a scenario where a company has provided products or services to a customer on credit terms, meaning the customer can pay at a later date. Until the payment is received, the amount owed by the customer is recorded as an accounts receivable on the company’s balance sheet. This represents money that the company expects to receive in the future. Once the customer pays the outstanding amount, the accounts receivable is reduced, and the company’s cash balance increases. This process illustrates how businesses manage their finances while maintaining a record of outstanding customer payments.