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

Previous problemNext problem

Struggling with Financial Accounting?

Join thousands of students who trust us to help them ace their exams!Watch the first video

Multiple Choice

Which of the following is an example of an income deduction related to receivables?

Notes receivable

Allowance for doubtful accounts

Interest receivable

Trade receivables

Previous problemNext problem

Verified step by step guidance

Understand the concept of income deductions related to receivables. These are adjustments made to account for potential losses or reductions in the value of receivables, such as uncollectible accounts.

Review the term 'Allowance for Doubtful Accounts.' This is a contra-asset account used to estimate and record the portion of receivables that may not be collected, reducing the reported value of receivables on the balance sheet.

Compare the other options provided: 'Notes Receivable,' 'Interest Receivable,' and 'Trade Receivables.' These are all types of receivables but do not directly represent income deductions. They are asset accounts that record amounts owed to the company.

Recognize that 'Allowance for Doubtful Accounts' is the correct answer because it directly relates to income deductions by estimating uncollectible receivables and reducing net income through bad debt expense.

Conclude that understanding the role of contra-asset accounts like 'Allowance for Doubtful Accounts' is essential for accurately reporting receivables and ensuring financial statements reflect potential risks of non-payment.