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

What is the usual difference between accounts payable and notes payable?

Accounts payable are typically informal, short-term obligations, while notes payable are formal, often written promises to pay a specific amount at a future date.

Notes payable are only used for inventory purchases, while accounts payable are used for all other expenses.

Accounts payable are classified as long-term liabilities, while notes payable are always current liabilities.

Accounts payable always require interest payments, while notes payable do not.

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Verified step by step guidance

Understand the definitions of accounts payable and notes payable: Accounts payable refers to short-term obligations to suppliers for goods or services received, typically informal and without interest. Notes payable, on the other hand, are formal written promises to pay a specific amount, often including interest, and can be either short-term or long-term liabilities.

Analyze the nature of accounts payable: These are usually informal agreements and are classified as current liabilities on the balance sheet. They do not typically involve interest payments.

Analyze the nature of notes payable: These are formal agreements, often documented with a promissory note, and may include interest payments. They can be classified as either current or long-term liabilities depending on the repayment terms.

Compare the classification of liabilities: Accounts payable are always classified as current liabilities, while notes payable can be classified as either current or long-term liabilities based on the repayment period.

Evaluate the payment terms and interest requirements: Accounts payable generally do not require interest payments, whereas notes payable often include interest as part of the repayment terms.