Final answer:
Receivables refers to amounts that are owed to a business for merchandise that was sold on credit. They are recorded as assets in a business's balance sheet.
Step-by-step explanation:
Receivables refers to amounts that are owed to a business for merchandise that was sold on credit. It represents the money that the business is yet to receive from customers for their purchases.
For example, if a customer buys a product on credit, they do not have to pay immediately. Instead, they owe the amount to the business, and it becomes a receivable until the customer settles the payment.
Receivables are an important part of a business's assets and are typically recorded in the balance sheet. They can be classified as current assets if they are expected to be collected within a year or as long-term assets if the collection period extends beyond a year.