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 type of receivable is most directly affected by the estimation and recording of bad debts expense?

Accounts Receivable

Interest Receivable

Advances to Employees

Notes Receivable

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Verified step by step guidance

Understand the concept of bad debts expense: Bad debts expense is an estimate of the amount of accounts receivable that a company does not expect to collect due to customers' inability or unwillingness to pay.

Identify the type of receivable most directly affected: Bad debts expense is specifically related to accounts receivable, as it represents amounts owed by customers for goods or services provided on credit.

Differentiate between the options: Interest receivable, advances to employees, and notes receivable are not directly affected by bad debts expense because they represent other types of receivables, such as interest earned, employee loans, or formal written promises to pay.

Connect bad debts expense to accounts receivable: The estimation and recording of bad debts expense adjust the accounts receivable balance to reflect the expected collectible amount, ensuring accurate financial reporting.

Conclude that accounts receivable is the correct answer: Since bad debts expense is directly tied to the collectability of accounts receivable, it is the type of receivable most affected by this estimation and recording process.