Final answer:
Accounts receivable signifies the amount owed by customers to a business and is reflected as an asset on the company's balance sheet.
Step-by-step explanation:
Accounts receivable represents the amount owed by customers to a business. Essentially, it is a line item on a company's balance sheet that signifies outstanding invoices or money customers have committed to pay in the future for goods or services they have already received but have not yet paid for. This is seen as an asset because it is expected to be converted into cash when customers pay their due amounts.
When we examine a bank's balance sheet, accounts receivable would be included among the assets. These could equate to loans made by the bank that customers are expected to repay. In contrast to accounts payable, which represents money owed by a company to its suppliers or creditors, accounts receivable reflects incoming funds. Hence, it plays a crucial role in a company's working capital and cash flow management.