What term refers to amounts to be received in the future from customers?

The term that refers to amounts to be received in the future from customers is Accounts Receivable. This represents the credit extended by a business to its customers, allowing them to purchase goods or services with the promise of payment at a later date. When a business makes a sale on credit, it records an accounts receivable, reflecting the expectation that it will receive cash in the future.

This concept is crucial in financial reporting because accounts receivable are considered a current asset on the balance sheet, indicating the company’s right to collect cash in the normal operating cycle. The management of accounts receivable is essential for maintaining healthy cash flow, as it affects liquidity and overall financial health.

In contrast, other terms such as Accounts Payable represent liabilities the business owes to suppliers, Retained Earnings indicate accumulated profits that are reinvested into the company, and Contributed Capital refers to the funds raised by issuing stock. These distinguishable categories serve different purposes in financial statements and analysis.