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Multiple Choice
Which of the following is NOT considered a type of receivable in financial accounting?
A
Interest Receivable
B
Inventory Receivable
C
Notes Receivable
D
Accounts Receivable
Verified step by step guidance
1
Understand the concept of receivables: Receivables are amounts owed to a company by customers or other parties. They are considered assets and are typically classified as current assets on the balance sheet.
Identify the types of receivables: Common types of receivables include Accounts Receivable (amounts owed by customers for goods or services), Notes Receivable (formal written promises to pay), and Interest Receivable (interest income earned but not yet received).
Analyze the term 'Inventory Receivable': Inventory is a physical asset that represents goods available for sale, not an amount owed to the company. Therefore, 'Inventory Receivable' is not a valid type of receivable in financial accounting.
Compare the options provided: Interest Receivable, Notes Receivable, and Accounts Receivable are all legitimate types of receivables. Inventory Receivable does not fit the definition of a receivable.
Conclude that 'Inventory Receivable' is NOT considered a type of receivable in financial accounting because it does not represent an amount owed to the company.