Final answer:
Accounts receivable are classified as current assets on the balance sheet, not as non-current assets, because they are expected to be converted into cash within one year. Non-current assets include long-term investments, whereas accounts receivable reflect short-term financial transactions.
Step-by-step explanation:
Reporting Accounts Receivable on the Balance Sheet
Accounts receivable are reported as a current asset on a company's balance sheet. An asset is something of value owned by the company. However, accounts receivable are distinct from non-current assets because they are expected to be converted into cash within a fiscal year or operating cycle. In contrast, non-current assets, such as property, plant, and equipment, are resources that provide value for more than one year. On a bank's balance sheet, assets like cash reserves and loans made reflect the bank's capacity to generate income through its financial activities. The liabilities represent the bank's obligations to others, such as deposits. The overall financial health is determined by the net worth, which is calculated by subtracting total liabilities from total assets. Therefore, accounts receivable are not reported as non-current assets but rather fall under the category of current assets due to their liquidity.