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 of the following is classified as an account receivable?

Cash received in advance from customers

Notes payable to suppliers

Prepaid rent for the company's office building

Amounts owed by customers for goods sold on credit

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Verified step by step guidance

Understand the concept of accounts receivable: Accounts receivable refers to amounts owed to a company by its customers for goods or services provided on credit. It represents an asset because it is money the company expects to receive in the future.

Analyze the options provided: Review each option to determine whether it fits the definition of accounts receivable. Focus on whether the item represents amounts owed by customers for goods or services sold on credit.

Option 1: Cash received in advance from customers - This is not accounts receivable because the company has already received the cash. It is classified as unearned revenue, a liability, until the goods or services are delivered.

Option 2: Notes payable to suppliers - This is not accounts receivable because it represents an obligation to pay suppliers, which is a liability, not an asset.

Option 3: Prepaid rent for the company's office building - This is not accounts receivable because it represents a prepayment for future use of office space, which is classified as a prepaid expense, an asset, but not related to customer credit sales.