Account receivable are classified in such way because it is expected to be paid within a year.
Accounts receivable is a term used to describe an amount of money due for payment from customer to a firm for goods or services delivered or used by them.
- In other word, any money owed by customers for purchases made on credit, it is termed as Account receivables under balance sheet.
- Let also understand that when there is an amount on purchase credit which went bad, such amount is treated as bad debt.
In conclusion, account receivables are considered current assets and not treated as bad debt because they can be expected to be paid within a year.
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