What does the term 'accounts receivable' refer to?

The term 'accounts receivable' refers specifically to income that has been earned but for which no cash payment has yet been received. This usually arises from credit sales or services provided where the payment is expected at a later date. It represents money that is owed to the organization by its clients or customers and is recorded as an asset on the balance sheet, reflecting the expectation of receiving cash in the future.

Understanding accounts receivable is crucial in financial management as it affects the organization's cash flow and working capital. Proper management of accounts receivable ensures that the organization maintains healthy cash flow by monitoring the outstanding amounts and following up on overdue accounts. This concept is fundamental in evaluating the organization's liquidity and can influence decisions on extending credit to customers.

The other options present concepts that do not align with the definition of accounts receivable. Liabilities owed to the organization, cash available in the bank, and investments made by the organization represent different financial aspects that do not encompass the characteristics of accounts receivable. Recognizing the correct definition helps in effectively managing financial records and analyzing the organization's performance.