Multiple Choice
Which type of receivable is most likely to be refunded to an employee, such as Susan, based on the taxes withheld and reported on her Form W-2?
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7. Receivables and Investments
Types of Receivables
Struggling with Financial Accounting?
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Which of the following is classified as a receivable on Quincy's balance sheet?
A
Notes Receivable
B
Inventory
C
Prepaid Expenses
D
Accounts Receivable
Verified step by step guidance1
Understand the concept of receivables: Receivables are amounts owed to a company by customers or other parties, typically resulting from sales or lending activities. They are classified as current assets on the balance sheet.
Identify the types of receivables: Common types include Accounts Receivable (amounts owed by customers for credit sales) and Notes Receivable (formal written promises to pay, often including interest).
Analyze the options provided: Inventory and Prepaid Expenses are not classified as receivables. Inventory represents goods available for sale, while Prepaid Expenses are payments made in advance for future benefits (e.g., insurance or rent).
Determine the correct classification: Both Accounts Receivable and Notes Receivable are classified as receivables on the balance sheet because they represent amounts owed to the company.
Conclude the solution: Based on the explanation, the correct answers are Accounts Receivable and Notes Receivable, as they meet the definition of receivables.
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Types of Receivables practice set
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