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Definition: Accounts Receivable is an accounting transaction that reflects money owed by entities (typically customers) to the firm on the sale of products or services on credit.
It is also the name of the department that is looking after the collection of this money.
AR is shown on the balance sheet as an asset.
In most firms, AR is typically processed by generating an invoice and mailing or emailing it to the client, who, in turn, must pay it within an established time frame, called credit terms or payment terms.