On a balance sheet, "accounts receivable" are considered an asset. . NOT a liability.
Think about it . . this is money that is due to the business compared to "Accounts Payable" which is money due to someone else. . .and thus a liability.
Accounts receivable would appear as an asset (+) on a balance sheet.
equity
Since its on the left side of the basic account equation of assets= liabilities + equity its normal balance would be a debit
The asset(e.g.cash, marketable securities, accounts receivable, inventories, land, building, etc..) , liabilities(e.g.accounts payable, notes payable, accruals, mortgage payable, etc..), and equity accounts (e.g.ordinary share capital, preference share capital, ordinary share premium, preference share premium, retained earnings.. etc.) appear in a balance sheet. As it is called balance sheet, the asset accounts must be equal with the liabilities and equity accounts (asset = liabilities + capital).
Accounts receivable is a debit.Answer:Accounts receivable is an asset and therefore maintains a debit balance. This is an account listing what a person or company owes you, or money that you expect to receive. Since it is an asset (all assets maintain a debit balance) it means to increase the account you debit it and to decrease it (when a payment is made by the customer) you credit it.Assets = debit balance (increase with debit, decrease with credit)Liabilities and Owners Equity = credit balance (increase with a credit, decrease with a debit)(GAAP)
When there is credit risk in accounts receivable, the amount that is expected to be uncollectible needs to be subtracted from accounts receivable (resulting in net accounts receivable). In case there is no such allowance created, accounts receivable is overstated. As a result, equity is overstated as well (since there are no expenses booked to create the allowance). Thus, not including the allowance leads to overstated assets and overstated equity.
Account receivable is that part of sales which are done on credit so if company received cash at the time of sales that would be asset as well so it is the amount which is receivable in future so it is current asset of company.
Assets, liabilities and owner's equity
sales and expenses
Assets, Liabilities, and Stockholder's Equity are all permanent accounts.
The format of the Balance Sheet is Assets = Liabilities + Equity * Current Assets * Fixed Assets * -------------------- * Total Assets * Current Liabilities * Long Term Liabilities * -------------------------- * Total Liabilities * Equity * Net Income * ---------------------------- * Total Equity * -------------------------- * Total Liabilities and Equity
Basic accounts found on the balance sheet include : ASSETS Cash, Marketable Securities, Accounts Receivable, Inventory, Prepaid Expenses,Investments (Long Term), Plant & Equipment(Less Depreciation) LIABILITIES Current Liabilities include: Accounts payable, Notes, Payable, Accrued Expenses, Long Term Liabilities include: Bond Payable Stockholders Equity include: Preferred Stock, Common Stock, Capital Paid in excess of par, Retained Earning, less Treasury Stocks.