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 is created when a company sells goods or services to a customer on credit, such as when a customer owes payment for 6 quarters and 4 pennies worth of goods?

Accounts Receivable

Advances to Employees

Notes Receivable

Interest Receivable

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Verified step by step guidance

Understand the concept of receivables: Receivables are amounts owed to a company by customers or other parties. They arise from credit sales or other transactions where payment is deferred.

Identify the type of transaction described: The problem mentions a company selling goods or services to a customer on credit. This indicates that the customer owes payment for the goods or services provided.

Match the transaction to the correct type of receivable: When goods or services are sold on credit, the amount owed by the customer is typically recorded as 'Accounts Receivable.' This is the most common type of receivable for credit sales.

Differentiate between other types of receivables: 'Advances to Employees' refers to amounts loaned to employees, 'Notes Receivable' involves formal written promises to pay, and 'Interest Receivable' pertains to interest earned but not yet received. None of these match the description of credit sales.

Conclude that the correct type of receivable for this transaction is 'Accounts Receivable,' as it directly relates to amounts owed by customers for goods or services sold on credit.