What Are Receivables?
Accounts receivable (A/R) are amounts owed to a company by customers for goods or services sold on credit. They are current assets expected to be collected within one year or the operating cycle.
Trade vs. Non-Trade Receivables
Trade receivables arise from normal sales operations. Non-trade receivables include interest receivable, tax refunds, and advances to employees. Both appear on the balance sheet but are reported separately.
Net Realizable Value
A/R is reported at net realizable value (NRV) on the balance sheet: Accounts Receivable − Allowance for Doubtful Accounts = NRV. This represents the amount the company actually expects to collect.