Multiple Choice
When a customer makes a purchase using a credit card, which type of receivable does the selling company typically record?
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7. Receivables and Investments
Types of Receivables
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Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
Raw materials is a(n) ______ account.
A
payable
B
revenue
C
inventory
D
receivable
Verified step by step guidance1
Understand the nature of raw materials: Raw materials are the basic inputs used in the production process to create finished goods. They are considered part of the company's inventory.
Identify the type of account: Inventory accounts are classified as asset accounts because they represent resources owned by the company that have future economic value.
Eliminate incorrect options: Payable accounts represent liabilities, revenue accounts represent income earned, and receivable accounts represent amounts owed to the company. None of these classifications fit raw materials.
Confirm the correct classification: Since raw materials are part of inventory, they are recorded under the inventory account, which is an asset account.
Conclude: Raw materials are classified as inventory, which is an asset account on the balance sheet.
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