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

Mr. Torres has a small savings account at a local bank. From the perspective of the bank, which type of receivable does this account represent?

Interest Receivable

Notes Receivable

None; it is a liability, not a receivable

Accounts Receivable

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Verified step by step guidance

Understand the concept of receivables: Receivables are amounts owed to a company or entity, typically representing claims for money, goods, or services provided. Examples include accounts receivable, notes receivable, and interest receivable.

Analyze the relationship between Mr. Torres and the bank: Mr. Torres has a savings account at the bank, meaning he has deposited money into the bank. The bank holds this money as a liability because it owes Mr. Torres the deposited amount.

Differentiate between receivables and liabilities: Receivables are assets for the entity that expects to receive payment, while liabilities are obligations to pay or return money. In this case, the bank has an obligation to return Mr. Torres's savings, making it a liability.

Evaluate the options provided: Interest receivable, notes receivable, and accounts receivable are all types of receivables, which represent amounts owed to the bank. However, Mr. Torres's savings account does not fit into any of these categories because it is not money owed to the bank but rather money owed by the bank to Mr. Torres.

Conclude that the correct answer is 'None; it is a liability, not a receivable,' because the savings account represents an obligation for the bank to return the deposited funds to Mr. Torres.