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

Previous problemNext problem

Struggling with Financial Accounting?

Join thousands of students who trust us to help them ace their exams!Watch the first video

Multiple Choice

Which of the following transactions best illustrates a cash outflow related to receivables?

Writing off an uncollectible account receivable

Collecting cash from a customer on account

Factoring accounts receivable with recourse and paying a service fee to the factor

Recognizing interest revenue on a note receivable

Previous problemNext problem

Verified step by step guidance

Understand the concept of cash outflow: A cash outflow occurs when cash is spent or paid out by the business, reducing the cash balance.

Analyze each transaction option: Writing off an uncollectible account receivable does not involve cash; it is an accounting adjustment. Collecting cash from a customer on account is a cash inflow, not an outflow. Recognizing interest revenue on a note receivable is a revenue recognition event, not a cash transaction.

Focus on the transaction involving factoring accounts receivable with recourse: Factoring is the process of selling accounts receivable to a third party (factor) for immediate cash. With recourse means the seller retains some liability if the receivables are uncollectible.

Identify the cash outflow in factoring: When accounts receivable are factored, the business typically pays a service fee to the factor, which represents a cash outflow.

Conclude that the correct transaction illustrating a cash outflow related to receivables is factoring accounts receivable with recourse and paying a service fee to the factor.