Multiple Choice
Which of the following is not considered a type of receivable in financial accounting?
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7. Receivables and Investments
Types of Receivables
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Which of the following would NOT be classified as a type of receivable on a company's balance sheet?
A
Accounts Receivable
B
Dividends Payable
C
Interest Receivable
D
Notes Receivable
Verified step by step guidance1
Understand the concept of receivables: Receivables are amounts owed to a company by customers or other parties, typically arising from sales, loans, or other transactions. They are classified as assets on the balance sheet.
Review the types of receivables listed: Accounts Receivable, Interest Receivable, and Notes Receivable. These are all amounts owed to the company and are classified as receivables.
Analyze the term 'Dividends Payable': Dividends Payable represents amounts the company owes to its shareholders as declared dividends. This is a liability, not an asset, and therefore cannot be classified as a receivable.
Compare the classifications: Receivables are assets, while Dividends Payable is a liability. This distinction is key to identifying which item does not belong in the receivables category.
Conclude that 'Dividends Payable' is NOT a type of receivable because it represents an obligation to pay, rather than an amount owed to the company.
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