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

The receivable that is usually evidenced by a formal, written instrument of credit is a(n):

Trade receivable

Interest receivable

Note receivable

Account receivable

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Understand the concept of receivables: Receivables are amounts owed to a company by customers or other parties. They are classified based on the nature of the agreement or evidence supporting the debt.

Learn about the types of receivables: Trade receivables arise from sales transactions, interest receivables are earned on interest-bearing accounts, accounts receivable are informal claims from customers, and notes receivable are formal claims supported by written instruments.

Focus on the definition of a note receivable: A note receivable is a formal, written promise to pay a specific amount of money at a future date, often including interest. It is documented through a promissory note.

Compare the options provided: Trade receivable, interest receivable, and account receivable are not typically evidenced by a formal written instrument. Only a note receivable fits this description.

Conclude that the correct answer is 'Note receivable' because it is the type of receivable that is evidenced by a formal, written instrument of credit, such as a promissory note.