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

Which of the following types of receivables is considered the most liquid asset?

Advances to Employees

Accounts Receivable

Interest Receivable

Notes Receivable

Previous problemNext problem

Verified step by step guidance

Understand the concept of liquidity: Liquidity refers to how quickly an asset can be converted into cash without losing its value. The most liquid assets are those that can be easily and quickly converted into cash.

Analyze each type of receivable: Advances to Employees are payments made to employees that are expected to be repaid or offset against future wages, which are not easily converted into cash. Interest Receivable represents interest earned but not yet received, which depends on the timing of payment. Notes Receivable are formal written promises to pay a specific amount, often with interest, and may have longer terms before they are converted into cash.

Focus on Accounts Receivable: Accounts Receivable represents amounts owed by customers for goods or services provided on credit. These are typically collected within a short period, making them highly liquid compared to other receivables.

Compare liquidity: Among the options provided, Accounts Receivable is considered the most liquid because it is expected to be collected in the shortest time frame and does not require additional steps like formal agreements or interest accrual.

Conclude: Based on the analysis, Accounts Receivable is the most liquid asset among the given types of receivables.