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 an example of a trade receivable?

Advances to employees

Interest receivable on loans to others

Tax refunds due from the government

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 or services provided on credit. They arise directly from the company's primary operations, such as selling goods or services.

Analyze the options provided: Each option represents a type of receivable, but only one aligns with the definition of trade receivables. For example, advances to employees are not related to sales activities, interest receivable on loans to others is a financial receivable, and tax refunds due from the government are not connected to customer transactions.

Focus on the correct option: Accounts receivable from customers for goods sold on credit fits the definition of trade receivables because it represents amounts owed by customers for goods or services provided as part of the company's core business operations.

Clarify why other options are incorrect: Advances to employees are classified as other receivables, interest receivable on loans to others is a financial receivable, and tax refunds due from the government are considered non-trade receivables.

Conclude the reasoning: The correct example of a trade receivable is accounts receivable from customers for goods sold on credit, as it directly relates to the company's sales activities and primary operations.