Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

7. Receivables and Investments

Types of Receivables

Financial Accounting

7. Receivables and Investments

Types of Receivables

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Multiple Choice

Which of the following types of receivables results in a cash inflow when collected?

Recognition of unearned revenue

Collection of accounts receivable

Writing off a bad debt

Allowance for doubtful accounts

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Verified step by step guidance

Understand the concept of receivables: Receivables represent amounts owed to a company by customers or other parties. When these receivables are collected, they result in a cash inflow because the company receives cash in exchange for the outstanding amount.

Analyze the options provided: Each option represents a different accounting transaction. Determine which one directly results in cash inflow upon collection.

Option 1 - Recognition of unearned revenue: This involves recording revenue that has been received in advance but not yet earned. It does not result in a cash inflow when collected because the cash was already received earlier.

Option 2 - Collection of accounts receivable: Accounts receivable represent amounts owed by customers for goods or services provided. When collected, this results in a direct cash inflow because the company receives payment for the outstanding balance.

Option 3 - Writing off a bad debt and Option 4 - Allowance for doubtful accounts: Writing off a bad debt involves removing uncollectible receivables from the books, and the allowance for doubtful accounts is an estimate of uncollectible receivables. Neither of these transactions results in a cash inflow because they do not involve the collection of cash.