Multiple Choice
In accounting for types of receivables, individual expenses are accumulated in separate:
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7. Receivables and Investments
Types of Receivables
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Which type of receivable is NOT typically covered by insurance for the cost of the insured’s car repairs?
A
Insurance Receivable
B
Notes Receivable
C
Trade Receivable
D
Accounts Receivable
Verified step by step guidance1
Understand the concept of receivables: Receivables are amounts owed to a company by customers or other parties. Common types include accounts receivable, notes receivable, and trade receivable.
Identify the context of the problem: The question is asking which type of receivable is NOT typically covered by insurance for car repair costs. This implies a connection between receivables and insurance claims.
Clarify the role of insurance receivable: Insurance receivable refers to amounts expected to be received from an insurance company, typically related to claims filed for damages or repairs.
Analyze the other types of receivables: Notes receivable are formal written promises to pay, often unrelated to insurance claims. Trade receivable refers to amounts owed by customers for goods or services sold, and accounts receivable are general amounts owed by customers.
Conclude based on the definitions: Insurance receivable is the type of receivable directly tied to insurance claims, while the other types (notes, trade, accounts receivable) are not typically associated with insurance for car repairs.
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