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 an example of open-end credit?

A trade account receivable for a single sale

A mortgage loan with fixed monthly payments

A 90-day note receivable

A company credit card used for ongoing purchases

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Verified step by step guidance

Understand the concept of open-end credit: Open-end credit refers to a revolving line of credit that allows the borrower to make repeated transactions up to a certain limit, repay the borrowed amount, and borrow again. Examples include credit cards and home equity lines of credit.

Analyze the options provided: Each option represents a different type of credit or financial arrangement. Compare each option to the characteristics of open-end credit.

Option 1: A trade account receivable for a single sale. This is not open-end credit because it is tied to a specific transaction and does not allow for ongoing borrowing.

Option 2: A mortgage loan with fixed monthly payments. This is a closed-end credit arrangement, as it involves a fixed loan amount and structured repayment terms, not revolving credit.

Option 3: A 90-day note receivable. This is also a closed-end credit arrangement, as it involves a specific loan amount and repayment within a fixed period. The correct answer is Option 4: A company credit card used for ongoing purchases, which matches the definition of open-end credit.