In financial accounting, Accounts Receivable is best classified as which type of account?

• A. Current asset account
• B. Owner's equity account
• C. Current liability account
• D. Revenue account

Answer: (A)

Verified step by step guidance

1. Understand the nature of Accounts Receivable: it represents money owed to the company by customers for goods or services delivered on credit.
2. Recall the basic accounting equation: \(\text{Assets} = \text{Liabilities} + \text{Owner's Equity}\), and recognize where Accounts Receivable fits in this equation.
3. Identify that Accounts Receivable is expected to be converted into cash within one year, which classifies it as a current asset rather than a long-term asset or liability.
4. Eliminate other options by understanding that it is not a liability (which represents what the company owes), nor is it owner's equity (which represents the owner's claims), nor revenue (which represents income earned).
5. Conclude that Accounts Receivable is best classified as a current asset account because it is an asset expected to be collected in the short term.