What term is used for short-term debts owed to a company by others, such as its customers?

What term is used for short-term debts owed to a company by others, such as its customers?

• A. Accounts payable
• B. Accounts receivable
• C. Equity financing
• D. Long-term liabilities

Answer: (B)

The term for short-term debts owed to a company by others, such as its customers, is accounts receivable. This refers to the money that customers owe to a business for goods or services that have already been delivered but not yet paid for. Accounts receivable is considered an asset on the company's balance sheet because it represents a future economic benefit, as the company expects to receive cash from its customers shortly. In contrast, accounts payable represents what the company owes to its suppliers and creditors and is a liability. Equity financing relates to funds raised by a company in exchange for ownership in that company, while long-term liabilities refer to debts that are due in more than one year. These definitions help clarify why accounts receivable is the correct choice for the debts owed to a company by its customers.

The term for short-term debts owed to a company by others, such as its customers, is accounts receivable. This refers to the money that customers owe to a business for goods or services that have already been delivered but not yet paid for. Accounts receivable is considered an asset on the company's balance sheet because it represents a future economic benefit, as the company expects to receive cash from its customers shortly.

In contrast, accounts payable represents what the company owes to its suppliers and creditors and is a liability. Equity financing relates to funds raised by a company in exchange for ownership in that company, while long-term liabilities refer to debts that are due in more than one year. These definitions help clarify why accounts receivable is the correct choice for the debts owed to a company by its customers.