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

Which of the following is classified as a trade receivable in financial accounting?

Accounts receivable from customers for goods sold on credit

Advances to employees

Tax refunds receivable

Interest receivable on loans

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Verified step by step guidance

Understand the concept of trade receivables: Trade receivables are amounts owed to a business by its customers for goods or services provided on credit. They arise directly from the company's primary operations, such as selling goods or services.

Analyze each option provided in the problem: Determine whether each item listed qualifies as a trade receivable based on its nature and relationship to the company's core operations.

Option 1: Accounts receivable from customers for goods sold on credit. This is classified as a trade receivable because it directly results from the company's primary activity of selling goods or services on credit.

Option 2: Advances to employees. This is not a trade receivable because it does not arise from the company's core operations but rather from internal transactions with employees.

Option 3 and 4: Tax refunds receivable and interest receivable on loans. These are not trade receivables because they do not originate from the sale of goods or services to customers but from other activities such as tax payments or lending.