Multiple Choice
Which of the following is a type of receivable that represents amounts owed by customers for goods or services provided on credit?
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7. Receivables and Investments
Types of Receivables
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Which of the following situations would make a check invalid as a receivable?
A
The check amount is written in both words and figures.
B
The check is post-dated and the date has not yet arrived.
C
The check is endorsed by the payee.
D
The check is drawn on a local bank and properly signed.
Verified step by step guidance1
Understand the concept of a receivable: A receivable is an amount owed to a business, typically from a customer, and is expected to be collected in the future. Checks are often used as a form of payment for receivables.
Analyze the validity of a check as a receivable: A check must meet certain criteria to be considered valid. These include being properly signed, not post-dated, and having consistent information (e.g., the amount written in both words and figures must match).
Evaluate the given options: Review each situation provided in the problem to determine whether it affects the validity of the check as a receivable.
Focus on the post-dated check: A post-dated check is one where the date written on the check is in the future. Such a check cannot be cashed or deposited until the specified date arrives, making it invalid as a receivable until that date.
Conclude that the post-dated check is the correct answer: Among the options provided, the post-dated check is the situation that makes the check invalid as a receivable because it cannot be processed until the future date specified on the check.
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