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

Accounts receivable are best described as:

Cash held by a company in its bank accounts

Investments in stocks and bonds held for trading purposes

Amounts a company owes to its suppliers for purchases made on credit

Amounts owed to a company by its customers for goods or services sold on credit

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Verified step by step guidance

Understand the concept of accounts receivable: Accounts receivable represent amounts owed to a company by its customers for goods or services that have been sold on credit. It is an asset on the company's balance sheet because it represents future cash inflows.

Eliminate incorrect options: Review the provided options and eliminate those that do not align with the definition of accounts receivable. For example, 'Cash held by a company in its bank accounts' refers to cash, not receivables.

Analyze the second option: 'Investments in stocks and bonds held for trading purposes' refers to marketable securities or investments, not accounts receivable.

Analyze the third option: 'Amounts a company owes to its suppliers for purchases made on credit' refers to accounts payable, which is a liability, not an asset.

Select the correct option: The correct description of accounts receivable is 'Amounts owed to a company by its customers for goods or services sold on credit,' as it matches the definition of this financial term.