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

When a customer makes a purchase using a credit card, which type of receivable does the selling company typically record?

Notes Receivable

Credit Card Receivable

Trade Receivable

Accounts Receivable

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Verified step by step guidance

Understand the concept of receivables: Receivables are amounts owed to a company by its customers for goods or services provided. They are classified based on the nature of the transaction and the payment method.

Identify the types of receivables mentioned in the problem: Notes Receivable, Credit Card Receivable, Trade Receivable, and Accounts Receivable. Each has distinct characteristics.

Focus on the transaction described: A customer makes a purchase using a credit card. This indicates that the payment is processed through a credit card company, which will remit the funds to the selling company after deducting fees.

Determine the appropriate classification: Since the payment involves a credit card, the receivable recorded by the selling company is typically categorized as 'Credit Card Receivable.' This is a specific type of receivable tied to credit card transactions.

Clarify why other options are incorrect: Notes Receivable refers to formal written promises to pay, Trade Receivable is a broader term for receivables from customers, and Accounts Receivable generally refers to amounts owed by customers not involving credit card transactions.