What does the term "accounts receivable" refer to?

The term "accounts receivable" refers specifically to the money that is owed to a business by its customers for goods or services that have been delivered but not yet paid for. This asset represents a claim for future cash inflows, as customers are expected to pay these amounts within a certain timeframe, typically outlined in the business’s credit terms.

In a small business context, managing accounts receivable effectively is crucial as it impacts cash flow and the overall financial health of the business. It is important for businesses to track their accounts receivable to ensure that they collect the money owed to them in a timely manner. This allows them to maintain liquidity and fund operations without borrowing.

The other options provided focus on different financial obligations or reserves. Money owed to suppliers relates to accounts payable, indicating obligations to purchase goods or services, while money owed to employees refers to wages or salaries, which is a liability for the business. Money set aside for future expenses typically would not be categorized as accounts receivable but rather as reserves or allocations in budgeting.