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 an account receivable on a company's balance sheet?

Advances to suppliers

Interest receivable from investments

Loans made to employees

Amounts owed by customers for goods sold on credit

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Verified step by step guidance

Understand the concept of accounts receivable: Accounts receivable refers to amounts owed to a company by its customers for goods or services provided on credit. It represents a current asset on the balance sheet.

Analyze each option provided in the problem: Determine whether each item qualifies as an account receivable based on the definition. For example, advances to suppliers are payments made by the company, not amounts owed by customers.

Focus on the correct answer: Amounts owed by customers for goods sold on credit meet the definition of accounts receivable because they represent money the company expects to collect from customers.

Clarify why other options are not accounts receivable: Interest receivable from investments is classified as interest income, and loans made to employees are considered other receivables or advances, not accounts receivable.

Conclude that accounts receivable specifically pertains to amounts owed by customers for goods or services sold on credit, and this is the correct classification for the given answer.