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 typically earns interest over time but has a limited number of transfers and withdrawals allowed?

Nontrade Receivable

Trade Receivable

Notes Receivable

Accounts Receivable

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Verified step by step guidance

Understand the concept of 'Notes Receivable': Notes Receivable are formal written promises to pay a specific amount of money at a future date, often with interest accruing over time. They are typically associated with loans or credit agreements.

Compare 'Notes Receivable' with other types of receivables: Unlike Accounts Receivable or Trade Receivable, which are usually informal and tied to regular business transactions, Notes Receivable are formal and often involve interest payments.

Identify the characteristics of 'Notes Receivable': Notes Receivable typically have a limited number of transfers and withdrawals allowed, as they are governed by the terms of the written agreement. This distinguishes them from other receivables that may not have such restrictions.

Recognize the earning of interest: Notes Receivable earn interest over time, which is a key feature that sets them apart from other receivables like Accounts Receivable or Trade Receivable, which generally do not accrue interest.

Conclude why 'Notes Receivable' is the correct answer: Based on the characteristics of earning interest and having limited transfers/withdrawals, 'Notes Receivable' fits the description provided in the problem.