Accounts receivable on your balance sheet are more or less your main asset. Well, obviously your cash and bank accounts are fairly close too, but as receivables are direct result from your sales revenue, they are to be treated with utmost accuracy and care – have the amounts correct, due dates monitored and clients kept happy and satisfied. It’s all what receivables are about. 

In accounting, simply put, you’d treat your receivables in their cost less any allowances. “Cost” is their face value as it was given on the invoice (note that it includes all the possible discounts given). That’s the amount you want to receive from your client for the goods and / or services sold. An “allowance” is a write-off done to a receivable balance based on any doubt you have regarding its collectability. Normally you wouldn’t have an allowance recognized for a receivable balance, but under some circumstances the clients may go into bankruptcy or just face financial difficulties up to an extent that they may not pay the full amounts.