How Accounts Receivable is classified?

Accounts Receivable (AR) is classified as a current asset on a company's balance sheet, as it represents money owed to the business by customers for goods or services delivered but not yet paid for. It is typically expected to be collected within one year, making it a short-term asset. AR can also be categorized based on factors such as aging, credit risk, and the nature of the accounts (e.g., trade receivables versus other receivables). Proper classification is essential for effective cash flow management and financial analysis.