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 value is of primary interest to taxing authorities?

Nominal (face) value

Net realizable value

Fair market value

Present value

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Understand the concept of 'receivable value': Receivable value refers to the amount expected to be collected from accounts receivable or other receivables. Different types of values are used for various purposes, such as nominal (face) value, net realizable value, fair market value, and present value.

Analyze the role of taxing authorities: Taxing authorities are primarily concerned with the value of receivables for tax reporting purposes. They focus on the nominal (face) value because it represents the original amount owed before any adjustments, such as allowances for doubtful accounts or discounts.

Compare the different types of receivable values: Nominal (face) value is the unadjusted amount owed. Net realizable value accounts for adjustments like bad debt allowances. Fair market value reflects the price at which the receivable could be sold in the market. Present value discounts future cash flows to their current worth.

Determine the relevance of nominal (face) value: Taxing authorities prioritize nominal (face) value because it is straightforward and aligns with tax regulations, which often require reporting the original amount owed rather than adjusted or market-based values.

Conclude the reasoning: Based on the above analysis, the nominal (face) value is the type of receivable value of primary interest to taxing authorities, as it provides a clear and consistent basis for tax calculations.