Is Accounts Receivable A Current Asset?

Previously, we discussed about “Is Accounts Receivable An Asset” but here we are concerned with the very basic question, “Is Accounts Receivable A Current Asset”? in Accounting.

The answer to this question is "Yes", because Accounts Receivable is the amount of debts due from customers in very near future which is convertible into cash very quickly. The future cash payment received from customers provides benefits to the business within the Current Accounting Period or Accounting Cycle.

Accounts Receivable is also known as Debtor. Accounts Receivable basically is a Current Asset but due to its quick Liquidity, it is the part of Quick Assets since these types of assets are convertible into cash very quickly.

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For Example, if the Entrepreneur sold goods worth Rs. 40000 To Customer, Mr. A, then Mr. is the Account Receivable for the company because the customer has to pay the amount for goods sold on credit basis in a specified accounting period. We record this Business Transaction in the form of Accounting Journal Entry in the Journal of Company as shown below:

                       (Accounts Receivable) Mr. A    40000

                                                                      Sales a/c      40000

(Sold Goods Worth Rs. 40000 To Mr. On Credit)

So, we can say that Accounts Receivable / Debtor is a Current Asset.