Is Accounts Receivable A Revenue?

Previously, we studied about “Is Accounts Receivable An Asset” in Accounting but here we are concerned with the very basic Accounting Question that is, “Is Accounts Receivable A Revenue”? 

The answer to this very simple Accounting Question is that Accounts Receivable is not revenue because Accounts Receivable is the amount of debt due from the customers within the specified Accounting Period or Accounting Cycle while Revenue is the price of goods sold or services rendered by the business to customers on Cash Basis or Credit Basis.

Accounts Receivable is a Current Asset which is convertible into cash very quickly. Actually, According To Accrual Basis of Accounting, all revenues and expenses are recorded whether Cash is received or Not. So, all those revenues against which the company still not received the Cash Payment from the customers are Accounts Receivable. When the company actually receives the Cash from Customers, then these become the Revenues for the company.

For Example, if the Company sold goods worth Rs. 70000 to Customer Mr. A on Credit Basis, then this customer is a Account Receivable for the company untill the payment received from the customer. When the customer makes the payment on time, then this creates the actual sales for the business. The Same case is applied in case of Online Store, when the products on Cart, then it Becomes the Accounts Receivable For the Company and when the customer buys the products and goods delivered to them, then it becomes the sales or revenues for the business.

So, it is all about “Is Accounts Receivable A Revenue” in Accounting.