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 is NOT a situation in which you would record a vendor credit?

Paying off an accounts receivable balance

Returning defective inventory to a supplier

Receiving a refund for overpayment to a vendor

Receiving a price adjustment from a vendor after purchase

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Verified step by step guidance

Understand the concept of a vendor credit: A vendor credit is recorded when a company receives a reduction in the amount owed to a vendor. This can occur due to returns, refunds, or price adjustments.

Analyze the first option: 'Paying off an accounts receivable balance.' Accounts receivable represents amounts owed to the company by customers, not vendors. Therefore, this situation does not involve a vendor credit.

Analyze the second option: 'Returning defective inventory to a supplier.' When defective inventory is returned, the company typically receives a credit from the vendor, reducing the amount owed. This is a valid situation for recording a vendor credit.

Analyze the third option: 'Receiving a refund for overpayment to a vendor.' If a company overpays a vendor and receives a refund, this would also involve recording a vendor credit to adjust the accounts payable balance. This is a valid situation for a vendor credit.

Analyze the fourth option: 'Receiving a price adjustment from a vendor after purchase.' A price adjustment reduces the amount owed to the vendor, which would also result in recording a vendor credit. This is a valid situation for a vendor credit.