 Welcome to Unit 4 of Sailor.org's Introduction to Financial Accounting. This unit is divided into five subunits and will take just under three hours to complete. We're going to focus in this unit on accounts receivable. Basically, accounts receivable is a term that refers to money owed to a business. The business calculates and keeps track of this money that is owed to it, so it knows how much it expects to have. So for example, imagine that a company has made three big sales, each of which is worth $1,000. The company has set out invoices to the three buyers, but has not yet received payment. The $3,000 amount owed to the company by these buyers is recorded as accounts receivable. Make sure you pay attention to when a transaction is recorded in accounts receivable versus, for example, when it is recorded as an actual cash transaction. Now you might be wondering, what happens if a company cannot collect the money owed to it? Non-payment or the inability to collect anticipated revenues will of course affect a company's profitability. When money can't be collected, companies can handle this by using what it calls write-offs, which are losses taken by the company for bad debt. Companies suffered millions of bad debt write-offs during the 2008 recession, since customers could not pay off their credit card bills owed to companies. Now on a lighter note, you're almost halfway done with the course, so keep up the great work.