What does accounts receivable represent for a company?

Accounts receivable represents the amount owed by customers to a company for goods or services that have been provided but not yet paid for. This signifies credit extended by the company to its customers, which is an essential aspect of business operations. When a company sells products or services on credit, it generates accounts receivable, reflecting an expectation of future cash inflows.

This asset is crucial for assessing a company's liquidity and overall financial health, as it indicates the revenue that is expected to be collected. When analyzing a company's balance sheet, accounts receivable appears under current assets, indicating that it is expected to be converted into cash within a year.

In contrast, the other choices relate to different financial concepts. Total cash available for operations focuses on liquid assets that can be used immediately. Amount owed to suppliers pertains to accounts payable, which reflects the company's obligations to its creditors. The cost of goods sold refers to the direct costs attributable to the production of the goods sold by the company, which is a measure of expense, not an asset. Thus, the correct understanding of accounts receivable is essential for evaluating a company’s credit policies and cash management strategies.