alleryStart learning →Amounts owed to a firm by customers who bought goods or services on credit are recorded as what?
ARetained earnings
BAccounts payable
CAccrued expenses
DAccounts receivable
Answer & Solution
Correct answer: D. Accounts receivable
1. Accounts receivable are amounts owed to the firm by customers who bought goods or services on credit.
2. They are a current asset, since the firm expects to turn them into cash within the year.
3. Accounts payable run the other way: they are what the firm owes for its own credit purchases.
_Source: OpenStax Introduction to Business (CC BY 4.0), Ch 14 "Using Financial Information and Accounting", section 14.4 The Balance Sheet_
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