Accounts Receivable Questions And Answers

Here are Some Important Questions And Their Answers so students can get correct understanding about this Accounting Term in their mind when prepare Financial Statements and does not make any mistake during the Steps in The Accounting Cycle.

Is Accounts Receivable An Asset or Revenue?

Account Receivable is an Asset and not Revenue because it is the amount due from the customers of the Entrepreneur to whom an Entrepreneur sold goods on credit. So these become the Current Asset of the business in current Accounting Cycle or Accounting Period.

Is Accounts Receivable An Asset or Liability?

No, Account Receivable is Current Asset as it has life of equal to less than one year. It is the amount due from the customers and considered as Current Asset from the business point of view. But from the point of view of customers who purchased goods from business on credit can be considered as Current Liability or Account Payable.

Is Accounts Receivable An Asset or Owner’s Equity?

Account Receivable is a Current Asset so it can not be considered as Owner’s Equity.

Basically, it is the amount due from the customers to whom business sold goods on credit. So this amount becomes resources for the entrepreneur business in current accounting period.

You may also be interested in Accounts Payable Questions And Answers

Do You Know About Accounting Equation

There are two parts of Equity.

1. Liabilities

Liabilities are the rights of outsiders against the assets of the Business.

2. Owner’s Equity

Owner’s Equity is the right of the owners against Assets of the Entrepreneur’s Business.

As the Business has to pay the debts of its owners and outsiders to carry on the business successfully, so we can say that Accounts Receivable can not be considered as Owner’s Equity.