Is Accounts Receivable a Debit or Credit?
Accounts receivable is a debit. It is a current asset, so it increases with a debit when you invoice a customer and decreases with a credit when they pay. Its normal balance is a debit, and it is reported on the balance sheet.
- Account category
- Asset
- Normal balance
- Debit (Dr)
- Increases with
- Increase (Dr)
- Decreases with
- Decrease (Cr)
- Financial statement
- Balance sheet
- Contra account
- Allowance for doubtful accounts
Classifying one account is easy. Ledger IQ classifies the whole trial balance.
Try it freeAccounts receivable on a trial balance
| Acct # | Account | Debit | Credit |
|---|---|---|---|
| 1000 | Cash | 48,200.00 | |
| 1200 | Accounts receivable (the account this page is about) | 86,400.00 | |
| 1250 | Allowance for doubtful accounts | 4,200.00 | |
| 1500 | Equipment | 120,000.00 | |
| 1510 | Accumulated depreciation | 38,000.00 | |
| 2000 | Accounts payable | 31,500.00 | |
| 3000 | Common stock | 50,000.00 | |
| 3900 | Retained earnings | 92,000.00 | |
| 4000 | Sales revenue | 420,000.00 | |
| 5000 | Cost of goods sold | 240,000.00 | |
| 6000 | Operating expenses | 141,100.00 | |
| Total | 635,700.00 | 635,700.00 |
Example journal entries
| Account | Debit | Credit |
|---|---|---|
| Accounts receivable | 9,500.00 | |
| Service revenue | 9,500.00 |
| Account | Debit | Credit |
|---|---|---|
| Cash | 9,500.00 | |
| Accounts receivable | 9,500.00 |
| Account | Debit | Credit |
|---|---|---|
| Allowance for doubtful accounts | 1,100.00 | |
| Accounts receivable | 1,100.00 |
Why it works that way
Assets equal liabilities plus equity. Assets sit on the left of that equation, and the left side increases with debits, so a receivable behaves like cash, inventory and equipment.
Follow the transaction and it explains itself. You deliver the work and raise an invoice. Revenue has been earned, so you credit revenue. Nothing arrived in the bank, so the other side is not cash. What you hold is a right to collect, and that right is an asset, so you debit accounts receivable. When the customer pays, the promise turns into money: debit cash, credit accounts receivable.
It is the mirror image of accounts payable, which is a liability and runs the other way.
How it looks on a trial balance export
On an export with separate debit and credit columns, accounts receivable sits in the debit column and the allowance sits in the credit column. On a single signed balance column, the receivable prints as a positive and the allowance as a negative or in parentheses. Both are correct.
The pairing matters. They are two accounts on the export and two lines on the return, so netting them before you start destroys information Schedule L specifically asks for.
Accounts receivable should also agree to the accounts receivable aging. If it does not, somebody posted a journal entry straight to the control account with no customer attached, and the subledger has disagreed with the general ledger ever since.
Mistakes that throw it off
Recording the customer payment as revenue. Revenue is counted twice, once when invoiced and once when paid, and the receivable never clears. The balance climbs year after year.
Netting the allowance into the receivable. Both Schedule L lines are then wrong, and the allowance movement that belongs on Schedule M-1 has nowhere to come from.
Treating a customer deposit as a negative receivable. Money received before the work is done is unearned revenue, a liability. Parking it in receivables understates both current assets and current liabilities.
Leaving uncollectable invoices on the books. A four year old receivable from a closed business is not an asset. The write off is a real conversation about the year it became worthless, not a silent entry in whichever year somebody noticed.
Where it fits in the accounting equation
Tax return treatment
| Form | Line |
|---|---|
| Form 1120 | Schedule L line 2a, allowance on line 2b |
| Form 1120S | Schedule L line 2a, allowance on line 2b |
| Form 1065 | Schedule L line 2a, allowance on line 2b |
Common questions
Is accounts receivable a debit or credit?
A debit. Accounts receivable is a current asset, so it increases with a debit, decreases with a credit, and carries a normal debit balance. Raising an invoice debits accounts receivable and credits revenue. Receiving the payment debits cash and credits accounts receivable.
Is accounts receivable an asset or a liability?
An asset, and normally a current one, because it is the right to collect money for goods or services already delivered. It is the mirror image of accounts payable, which is a liability representing what the business owes. Receivables sit on the left side of the accounting equation and therefore increase with debits.
Is the allowance for doubtful accounts a debit or credit?
A credit. The allowance is a contra asset, so it runs opposite to the receivable it sits against: it increases with a credit, decreases with a debit, and carries a normal credit balance. Setting it up debits bad debt expense and credits the allowance. Writing off a specific account debits the allowance and credits accounts receivable.
What is the journal entry for accounts receivable?
Two entries in sequence. When you invoice, debit accounts receivable and credit revenue, for example 9,500 each way for a services invoice. When the customer pays, debit cash 9,500 and credit accounts receivable 9,500. The receivable exists only between those two entries.
Where does accounts receivable go on the tax return?
On Schedule L, at book. It is line 2a, trade notes and accounts receivable, on Forms 1120, 1120S and 1065, with the allowance for bad debts reported separately on line 2b. The form asks for the gross receivable and the allowance on separate lines, so netting them understates both.
What does a credit balance in accounts receivable mean?
That customers have paid more than they owe, at least on paper. The usual causes are a customer deposit recorded against the receivable instead of unearned revenue, a payment applied to the wrong customer, or a payment recorded twice. A genuine deposit is a liability and belongs in the liability section, not as a negative asset.
Last reviewed October 17, 2026.