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

If you make a late credit payment, you might see the lender add which of the following to your account?

A dividend

A finance charge

A prepaid expense

An inventory adjustment

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Verified step by step guidance

Understand the context of the problem: Late credit payments typically result in additional charges imposed by the lender. These charges are not related to dividends, prepaid expenses, or inventory adjustments, as these terms have specific meanings in financial accounting.

Clarify the term 'finance charge': A finance charge is a fee charged by lenders for borrowing money or for late payments. It is typically calculated as a percentage of the outstanding balance or as a flat fee.

Eliminate incorrect options: A dividend is a distribution of profits to shareholders, which is unrelated to credit payments. A prepaid expense is an asset representing payments made in advance for goods or services, and an inventory adjustment relates to changes in inventory levels, neither of which apply to late credit payments.

Focus on the correct option: A finance charge is the most relevant term in this context, as it represents the additional cost incurred due to late payment.

Conclude the reasoning: Late credit payments result in a finance charge being added to the account, as this is the standard practice for lenders to compensate for the delay in payment.