Is Accounts Receivable a Current Asset?

true-tamplin_2x_mam3b7

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

Are accounts receivable current assets?

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.

What is a current asset?

Current assets are any assets that can be converted into cash within a period of one year.

What are accounts receivable?

Accounts receivable are funds that a company is owed by clients who have received a good or service but have not yet paid.

How are Accounts Receivable typically reported on the balance sheet?

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.

What does it mean for Accounts Receivable to be considered a current asset?

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_2x_mam3b7

About the Author

True Tamplin, BSc, CEPF®

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.

Our Services

Ask a Financial Professional Any Question

Get Your Answer

DISCLAIMERS

Finance Strategists has an advertising relationship with some of the companies included on this website. We may earn a commission when you click on a link or make a purchase through the links on our site. All of our content is based on objective analysis, and the opinions are our own.

Content sponsored by 11 Financial LLC. 11 Financial is a registered investment adviser located in Lufkin, Texas. 11 Financial may only transact business in those states in which it is registered, or qualifies for an exemption or exclusion from registration requirements. 11 Financial’s website is limited to the dissemination of general information pertaining to its advisory services, together with access to additional investment-related information, publications, and links.

For information pertaining to the registration status of 11 Financial, please contact the state securities regulators for those states in which 11 Financial maintains a registration filing. A copy of 11 Financial’s current written disclosure statement discussing 11 Financial’s business operations, services, and fees is available at the SEC’s investment adviser public information website – www.adviserinfo.sec.gov or from 11 Financial upon written request.

11 Financial does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to 11 Financial’s website or incorporated herein, and takes no responsibility therefor. The articles and research support materials available on this site are educational and are not intended to be investment or tax advice. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.

© 2024 Finance Strategists. All rights reserved.

We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it.