What type of account is classified as "Accounts receivable"?

An account classified as "Accounts receivable" is categorized as an asset because it represents money owed to a business by its customers for products or services that have been delivered but not yet paid for. This classification is crucial in accounting as it reflects an expected cash inflow in the future, thereby increasing the company's resources.

Assets are resources that have economic value and can be converted into cash, and accounts receivable fit this definition perfectly, as they are essentially promises from customers to pay for goods or services provided on credit. Recognizing accounts receivable correctly ensures that the financial statements accurately reflect the company's financial position and liquidity.

The other classifications, such as liability, equity, and revenue, serve different purposes in the accounting framework and do not apply to accounts receivable, as they represent obligations, ownership interest, and earnings, respectively. Therefore, understanding why accounts receivable is an asset is fundamental to grasping the basics of financial reporting and the overall accounting process.