An account receivable is created when a good is shipped or a service is performed, and payment for that good is not made on a cash basis, but on a credit basis.
Days sales outstanding (DSO) is a measure of the average length of time it takes a firm’s customers to pay off their credit purchases.
An aging schedule breaks down accounts receivable according to how long they have been outstanding. This gives the firm a more complete picture of the structure of accounts receiv¬able than that provided by days sales outstanding.