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 on a company's balance sheet?

Interest earned but not yet received

A note receivable due in two years

A loan made to a company officer

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 represents amounts owed to a company by its customers for goods or services sold on credit. It is classified as a current asset on the balance sheet because it is expected to be collected within a year.

Analyze the options provided: Each option needs to be evaluated to determine whether it fits the definition of accounts receivable. Specifically, accounts receivable must involve amounts owed by customers for goods or services sold on credit.

Option 1: 'Interest earned but not yet received' - This is not classified as accounts receivable. Instead, it is considered accrued interest income, which is recorded as an asset but not under accounts receivable.

Option 2: 'A note receivable due in two years' - Notes receivable are separate from accounts receivable. They represent formal written promises to pay and are classified as either current or non-current assets depending on the due date. Since this note is due in two years, it would be classified as a non-current asset.

Option 3: 'A loan made to a company officer' - This is not accounts receivable. Loans to company officers are typically recorded as 'advances' or 'loans receivable' and are classified separately on the balance sheet. The correct answer is 'Amounts owed by customers for goods sold on credit,' as it directly matches the definition of accounts receivable.