Multiple Choice
5. Which of the following is NOT considered a type of receivable in financial accounting?
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7. Receivables and Investments
Types of Receivables
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Which of the following is NOT considered a type of receivable in financial accounting?
A
Interest Receivable
B
Accounts Receivable
C
Notes Receivable
D
Inventory Receivable
Verified step by step guidance1
Understand the concept of receivables: Receivables are amounts owed to a company by customers or other parties, typically as a result of credit sales or lending activities. They are classified as assets on the balance sheet.
Review the types of receivables: Common types of receivables include Accounts Receivable (amounts owed by customers for goods or services sold on credit), Notes Receivable (formal written promises to pay a specific amount at a future date), and Interest Receivable (interest income earned but not yet received).
Analyze the term 'Inventory Receivable': Inventory is a physical asset that represents goods available for sale, not an amount owed by customers or other parties. Therefore, 'Inventory Receivable' is not a valid type of receivable in financial accounting.
Compare the options provided: Interest Receivable, Accounts Receivable, and Notes Receivable are all legitimate types of receivables, while Inventory Receivable does not fit the definition of a receivable.
Conclude that Inventory Receivable is NOT considered a type of receivable in financial accounting, as it represents goods rather than amounts owed.
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