Multiple Choice
Which of the following situations would make a check invalid as a receivable?
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7. Receivables and Investments
Types of Receivables
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Business records include all of the following types of receivables except which of the following?
A
Notes Receivable
B
Inventory Receivable
C
Interest Receivable
D
Accounts Receivable
Verified step by step guidance1
Understand the concept of receivables: Receivables are amounts owed to a business by customers or other entities. They are considered assets and are recorded on the balance sheet.
Identify the types of receivables listed in the problem: Notes Receivable, Interest Receivable, and Accounts Receivable are all valid types of receivables commonly found in business records.
Clarify the term 'Inventory Receivable': Inventory is not considered a receivable. It is classified as a current asset but represents goods available for sale, not amounts owed to the business.
Compare the options: Notes Receivable, Interest Receivable, and Accounts Receivable are legitimate receivables, while Inventory Receivable is not a recognized category in accounting.
Conclude that the correct answer is 'Inventory Receivable' because it does not fit the definition of receivables, which are amounts owed to the business.
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