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 best describes the primary difference between a merchant credit card receivable and a title loan receivable?

Merchant credit card receivables are classified as long-term assets, while title loan receivables are always current assets.

Title loan receivables are generated from sales transactions, while merchant credit card receivables result from lending activities.

A merchant credit card receivable arises when a business accepts payment via credit card and awaits payment from the credit card company, while a title loan receivable is created when a lender provides a loan secured by the borrower's asset title.

A merchant credit card receivable is always secured by collateral, whereas a title loan receivable is unsecured.

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Verified step by step guidance

Step 1: Understand the concept of merchant credit card receivables. These arise when a business accepts payment via credit card and awaits payment from the credit card company. They are typically unsecured and classified as current assets.

Step 2: Understand the concept of title loan receivables. These are created when a lender provides a loan secured by the borrower's asset title, such as a car or property. They are secured by collateral and can be classified as either current or long-term assets depending on the loan terms.

Step 3: Compare the two types of receivables. Merchant credit card receivables are tied to sales transactions and involve waiting for payment from the credit card company, while title loan receivables involve lending activities and are secured by the borrower's asset title.

Step 4: Clarify the classification of assets. Merchant credit card receivables are generally current assets due to their short-term nature, while title loan receivables can be either current or long-term depending on the loan duration.

Step 5: Conclude the primary difference. The key distinction lies in the nature of the transaction: merchant credit card receivables arise from sales transactions and are unsecured, while title loan receivables arise from lending activities and are secured by collateral.