accounts receivable (A/R)
Definition
Sales made but not paid-for by the customers (trade debtors). Accounts receivables are shown as current (short-term) assets in a balance sheet and are, in fact, unsecured promises by customers to pay in the future. These sums are a key factor in determining a firm's liquidity and may be discounted used in raising a short-term bank loan, or sold to a factor. A provision is usually made in the accounts of a firm to offset uncollectible accounts receivable (bad debts) as losses.
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