Accounts receivable

Accounts receivable is a fancy way of talking about money that someone else owes a company. Imagine your friend borrowing your toy and promising to return it next week. The toy is your accounts receivable! The company gives their product or service to someone else and expects them to pay for it later on. Like when a grocery store lets you take food home and you pay at the cash register later. When the company gets paid, it can use that money to grow and make more things. If someone doesn't pay them at all, the company might have to take legal action to get their money back.