A form of receivables (accounts receivable) that represent the amount that customers owe an entity for the goods or services sold to them (i.e., for sales on credit). This amount is billed to customers for the goods or services delivered in the ordinary course of business.
Trade receivables constitute all outstanding amounts that arise from trade transactions (sales) to customers, which are reported in an entity’s books of account. As part of receivables, these amounts are short-term debts that are expected to be paid back in less than a year. In the meantime, trade receivables appear on balance sheet as an asset account, particularly a current asset.
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