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 the legal right to receive cash from a credit sale and represents an asset of the company?

Accounts Receivable

Notes Payable

Unearned Revenue

Inventory

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Verified step by step guidance

Understand the concept of 'Accounts Receivable': It represents the legal right to receive cash from customers for goods or services sold on credit. It is classified as an asset because it is expected to provide future economic benefits.

Analyze the term 'Notes Payable': This represents a liability, not an asset. It is a written promise to pay a specific amount of money at a future date, typically arising from borrowing activities.

Examine 'Unearned Revenue': This is also a liability, not an asset. It represents cash received in advance for goods or services that have not yet been delivered or performed.

Review 'Inventory': Inventory is an asset, but it does not represent the legal right to receive cash from a credit sale. Instead, it refers to goods available for sale or raw materials used in production.

Conclude that 'Accounts Receivable' is the correct answer because it directly represents the legal right to receive cash from a credit sale and is classified as an asset on the company's balance sheet.