Multiple Choice
In which of the following ledgers must an outstanding patient balance be recorded?
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7. Receivables and Investments
Types of Receivables
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Which of the following is an example of a trade receivable?
A
Tax refunds receivable
B
Advances to employees
C
Accounts receivable from customers for goods sold on credit
D
Interest receivable on loans
Verified step by step guidance1
Understand the concept of trade receivables: Trade receivables are amounts owed to a business by its customers for goods or services provided on credit. These are directly related to the core operations of the business.
Analyze each option provided: Tax refunds receivable, advances to employees, accounts receivable from customers for goods sold on credit, and interest receivable on loans.
Eliminate options that do not fit the definition of trade receivables: Tax refunds receivable and advances to employees are not related to the sale of goods or services to customers. Similarly, interest receivable on loans is related to financing activities, not trade operations.
Identify the correct option: Accounts receivable from customers for goods sold on credit fits the definition of trade receivables because it arises from the sale of goods or services to customers on credit terms.
Conclude that the correct answer is 'Accounts receivable from customers for goods sold on credit,' as it directly represents a trade receivable.
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