Accounting Fundamentals Certification (AFC) Practice Test 2025 – The Comprehensive All-in-One Guide to Exam Success!

Accounts Receivable is considered an asset account because it represents money that is owed to a business by its customers for goods or services that have been delivered but not yet paid for. This type of account is reflected on the balance sheet and is categorized under current assets. Accounts Receivable is essential for understanding a company’s liquidity and cash flow, as it indicates the potential cash that will be received in the future.

In accounting terms, assets are resources owned by a company that have economic value, and Accounts Receivable is a prime example of this, as it reflects a claim for payment that will eventually convert into cash. Other options such as liability accounts represent obligations the business owes to others, equity accounts reflect the owner's interest in the business, and revenue accounts track income generated, none of which apply to Accounts Receivable, which distinctly falls under the asset category.