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

Previous problemNext problem

Struggling with Financial Accounting?

Join thousands of students who trust us to help them ace their exams!Watch the first video

Multiple Choice

Filing for bankruptcy can make it difficult for a customer to reestablish and obtain which of the following types of receivables?

Trade credit

Notes payable

Inventory

Prepaid expenses

Previous problemNext problem

Verified step by step guidance

Understand the concept of bankruptcy: Bankruptcy is a legal process through which individuals or businesses unable to meet their financial obligations can seek relief from some or all of their debts. It often impacts the financial credibility of the entity filing for bankruptcy.

Define trade credit: Trade credit is a type of receivable extended by suppliers to customers, allowing them to purchase goods or services on account and pay later. It is based on trust and the customer's creditworthiness.

Analyze the impact of bankruptcy on trade credit: Filing for bankruptcy damages the customer's creditworthiness, making it difficult for suppliers to trust them with trade credit. Suppliers may be hesitant to extend credit due to the increased risk of non-payment.

Clarify why other options are less relevant: Notes payable, inventory, and prepaid expenses are not directly impacted by the customer's ability to reestablish creditworthiness after bankruptcy. These items are either liabilities or assets, not receivables extended by suppliers.

Conclude that trade credit is the correct answer: Based on the analysis, trade credit is the type of receivable that becomes difficult for a customer to reestablish after filing for bankruptcy.