Multiple Choice
Which of the following statements about the accounting for debt investments is true?
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7. Receivables and Investments
Types of Receivables
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Which of the following is considered a negative item on a person's credit report?
A
Paid-in-full installment loans
B
Authorized user status on a credit card
C
Recent credit inquiries by the individual
D
Delinquent accounts receivable
Verified step by step guidance1
Understand the concept of a credit report: A credit report is a detailed record of an individual's credit history, including their borrowing and repayment activities. It is used by lenders to assess creditworthiness.
Identify negative items on a credit report: Negative items are entries that indicate poor financial behavior or risk, such as late payments, delinquent accounts, or bankruptcy filings.
Analyze the options provided: Paid-in-full installment loans and authorized user status on a credit card are generally positive or neutral items on a credit report. Recent credit inquiries may slightly lower a credit score but are not considered a major negative item.
Focus on delinquent accounts receivable: Delinquent accounts receivable refer to unpaid debts that are overdue. These are considered a negative item because they indicate a failure to meet financial obligations.
Conclude that delinquent accounts receivable are the correct answer, as they represent a significant negative impact on a person's credit report.
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