Accounts Receivable (A/R) is money owed to a company by customers for goods or services delivered on credit. Reported as a current asset on the balance sheet. Days Sales Outstanding (DSO) measures how quickly customers pay: $1M annual A/R with $10M revenue = 36.5 DSO (taking 36.5 days on average). Industries vary — software might run 30-45 DSO; construction often 60-120. Aging schedules categorize A/R by age (0-30 days, 31-60, 61-90, 90+). Allowance for Doubtful Accounts estimates uncollectible A/R, reducing reported A/R. Managing A/R aggressively (collections, credit terms) is critical for cash flow.
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Accounts Receivable
August 22, 2026 · Aditya Gupta
Accounting
Related terms
Accounts Payable
Accounts Payable (A/P) is money a company owes to suppliers for goods or services received but not yet…
Accrual Accounting
Accrual accounting recognizes revenues when earned (regardless of cash receipt) and expenses when incurred (regardless of cash payment)…
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Amortization is the systematic allocation of intangible asset cost over its useful life — analogous to depreciation but…
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