Trade receivable
A trade receivable is an amount owed by a customer for goods or services sold on credit in the ordinary course of business. It is a type of receivable, distinguished from amounts such as interest receivable or a loan to another entity. Record the credit sale when the revenue-recognition conditions are met, then reduce the customer balance when payment, returns or discounts are recorded.
Worked example
Goods are sold on credit for $800, ignoring sales tax. Debit trade receivables $800 and credit revenue $800. Receipt of $500 leaves $300 owed by the customer, before any allowance or other adjustment.
Common mistake
A receivable is not cash already received. Assess recoverability and distinguish a customer balance from a non-trade receivable.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | F1 | Direct | July 2027–August 2028 |
| ACCA | FA | Direct | September 2026–June 2027 |
| ACCA | K1 | Direct | July 2027–August 2028 |
| CIMA | BA3 | Direct | Official assessment-window verification pending |
| FIA | FFA | Direct | September 2026–June 2027 |
Related terms
Also called: trade accounts receivable, trade debtor