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?

Interest receivable from investments

Advances to suppliers

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 sold on credit. It represents a claim for payment and is recorded as an asset on the balance sheet.

Analyze the options provided: Review each option to determine whether it fits the definition of accounts receivable. Specifically, focus on whether the amounts are owed by customers for goods or services sold on credit.

Option 1: Interest receivable from investments - This represents income earned from investments but not yet received. It is not related to goods or services sold on credit, so it is not classified as accounts receivable.

Option 2: Advances to suppliers - These are payments made to suppliers in advance for goods or services. Since this is a prepayment and not an amount owed by customers, it is not classified as accounts receivable.

Option 3: Loans made to employees - These are amounts lent to employees and represent a receivable, but they are not related to goods or services sold on credit. Therefore, they are not classified as accounts receivable. The correct classification is 'Amounts owed by customers for goods sold on credit,' as this fits the definition of accounts receivable.