Invoices and Accounts Receivable

When you make a cash sale, you will enter the fact that you made a sale into your sales account and, depending on whether you received cash or a check, you will make an entry into one of those accounts as well. In a credit sale, the entry in the sales account remains the same. However, you need to show that a customer owes you money in a different type of account. Say "Hello" to Accounts Receivable. Accountants often refer to this simply as A/R. A/R keeps track of products or services provided by your business to customers on credit for which payment has not yet been received. This is an asset, because the expectation is that you will receive payment soon. Accounts receivables are shown under current assets in your Balance Sheet because they are typically due within one year.