 Receivables are monetary claims against others. Receivables are acquired mainly by selling goods or services or by lending money. Managing receivables is an important part of a business's cash management processes. The three most common types of receivables are accounts receivable, notes receivable, and all other types of receivable, which we'll just call other receivables. Let's learn a little bit more about each of these in detail. Accounts receivable are the amount owed by customers that result from the sale of goods or services. Sometimes this is referred to as trade accounts receivable because it arises from transactions with our trade customers, meaning our ordinary course of business customers. These are usually current assets. Notes receivable are claims for which formal instruments of credit are issued as proof of debt, usually a promissory note. Often these arise from lending money or selling capital equipment. These could be either current or long-term assets depending on the nature of the agreement. Other receivables are non-trade related receivables, meaning they don't arise from transactions with our customers. You can see a few examples here on the slide like interest receivable and dividend receivable. These could be current or long-term assets depending again on the nature of the agreement. Most companies have two records of accounts receivable. They have the general ledger accounts receivable account, which presents the amount owed to a company from all of its customers. Often this is known as a control account. They also have subsidiary accounts that track the amount owed by each individual customer. The total of all the subsidiary accounts needs to equal the general ledger control account balance. Here is an example of that. The total amount of accounts receivable is $50,000. Here you can see that the customer's subsidiary ledgers add up to that amount. Companies sell on credit to increase sales revenue. How many would buy a new car if all car sales had to be in cash? Not many for sure. But selling on credit comes with risks as well, primarily that we will sell to someone who won't pay us back. This cost is known by a number of different account names, depending on the textbook you're using or the company that you're working for. Bad debt expense is probably the most common term, but sometimes uncollectible account expense or doubtful account expense might be used. Again, these terms are all interchangeable. The key is the word expense.