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 classified as a trade receivable?

Advances to employees

Tax refunds receivable

Interest receivable on investments

Accounts receivable from customers for goods sold on credit

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Verified step by step guidance

Understand the concept of trade receivables: Trade receivables are amounts owed to a business by its customers for goods sold or services provided on credit. These are directly related to the company's primary operations.

Analyze the options provided: Each option represents a type of receivable, but not all are classified as trade receivables. For example, advances to employees are not related to sales activities, tax refunds receivable are amounts owed by the government, and interest receivable on investments is related to financial activities rather than operational sales.

Focus on the correct classification: Accounts receivable from customers for goods sold on credit are directly tied to the company's core business operations and represent trade receivables.

Eliminate incorrect options: Advances to employees, tax refunds receivable, and interest receivable on investments are classified as other receivables, not trade receivables, because they are not related to the sale of goods or services.

Conclude the classification: The correct answer is accounts receivable from customers for goods sold on credit, as it aligns with the definition of trade receivables and represents amounts owed by customers for credit sales.