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

Previous problemNext problem

Struggling with Financial Accounting?

Join thousands of students who trust us to help them ace their exams!Watch the first video

Multiple Choice

Suppose your bank honors a check that you deposited from a customer, but later the check is returned as NSF (non-sufficient funds). Which type of receivable does this situation most directly affect?

Interest Receivable

Notes Receivable

Advances to Employees

Accounts Receivable

Previous problemNext problem

Verified step by step guidance

Understand the concept of NSF (non-sufficient funds): NSF checks occur when a customer writes a check, but their bank account does not have enough funds to cover the amount. This results in the check being returned to the depositor's bank.

Identify the type of receivable affected: Receivables represent amounts owed to the business. In this case, the NSF check indicates that the customer still owes the business money, which directly impacts Accounts Receivable.

Clarify why other receivable types are not affected: Interest Receivable relates to interest earned but not yet received, Notes Receivable refers to formal written promises to pay, and Advances to Employees are funds given to employees for future expenses. None of these are relevant to the NSF check scenario.

Relate the NSF check to Accounts Receivable: When the check is returned, the amount initially credited to the bank account must be reversed, and the customer's outstanding balance in Accounts Receivable must be reinstated.

Summarize the impact: The NSF check increases the balance in Accounts Receivable because the customer still owes the business the amount of the check.