Accounts Receivable is a component of which financial statement?

Accounts Receivable is a component of which financial statement?

• A. Balance Sheet
• B. Income Statement
• C. Cash Flow Statement
• D. Statement of Changes in Equity

Answer: (A)

Accounts receivable is an asset that represents money customers owe the company for sales made on credit. Because it will be converted to cash, it belongs on the balance sheet as a current asset. The income statement reports revenues and expenses, not amounts due from customers, so AR isn’t a line item there. The cash flow statement reflects actual cash movements and shows how changes in accounts receivable affect operating cash flow, but it doesn’t list AR as a separate item. The statement of changes in equity tracks changes in owners’ equity, not receivables. So, the balance sheet is the correct place for accounts receivable.

Accounts receivable is an asset that represents money customers owe the company for sales made on credit. Because it will be converted to cash, it belongs on the balance sheet as a current asset. The income statement reports revenues and expenses, not amounts due from customers, so AR isn’t a line item there. The cash flow statement reflects actual cash movements and shows how changes in accounts receivable affect operating cash flow, but it doesn’t list AR as a separate item. The statement of changes in equity tracks changes in owners’ equity, not receivables. So, the balance sheet is the correct place for accounts receivable.