Since it is all technically theory, there is no "right or wrong" way to look at it, but I think you may find this easier. Start at the neutral which is your reference voltage meaning it is zero. The sine wave representing voltage goes positive or up to the peak of A then goes down (negative) back to and through zero to a negative peak of B, then back up (positive) to zero and repeats.
To throw a wrench in it, 120 volts isn't the peak, it is 170 volts or 120 volts time the square root of 2, because sometimes the voltage is greater than 120 and sometimes it is less than 120. So it was decided that they would rate AC as the equivalent work done by DC.