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 an accounts receivable for an independent bookstore?

Inventory of unsold books

Amounts owed by customers for books sold on credit

Cash received from daily book sales

Prepaid rent for the bookstore premises

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Verified step by step guidance

Understand the concept of accounts receivable: Accounts receivable refers to amounts owed to a business by its customers for goods or services provided on credit. It represents a current asset on the balance sheet.

Analyze each option provided in the problem: Inventory of unsold books is a physical asset, not an accounts receivable. Cash received from daily book sales is already collected and does not represent amounts owed. Prepaid rent is an advance payment for future expenses, not a receivable.

Identify the correct classification: Amounts owed by customers for books sold on credit fit the definition of accounts receivable, as they represent money that the bookstore expects to receive from customers in the future.

Relate the correct answer to the accounting principle: Accounts receivable is recorded when a sale is made on credit, and it reflects the expectation of future cash inflows.

Conclude the reasoning: The correct classification for accounts receivable in this scenario is 'Amounts owed by customers for books sold on credit,' as it aligns with the definition and accounting treatment of receivables.