What does accounts receivable represent for a firm?

Accounts receivable represents the amounts owed to a firm by its customers for goods or services that have been delivered but not yet paid for. This situation arises typically when sales occur on credit, meaning the firm allows customers to make purchases with the promise of payment at a later date. Thus, this figure reflects money that the company anticipates will be collected in the future, highlighting the firm's sales on credit and the need to manage these receivables effectively to maintain cash flow.

The other options do not accurately capture this concept. Cash reserves refer to liquid assets available to a company for reinvestment or operational needs, not what is owed to it. Revenue from cash sales pertains specifically to transactions completed with immediate payment, which is distinct from accounts receivable. Lastly, the classification of assets held for more than one year relates to long-term assets, which does not define accounts receivable, as these are typically current assets expected to be settled within a fiscal year.