Multiple Choice
Which type of receivable is most directly associated with amounts owed to a company by customers for services provided on credit?
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7. Receivables and Investments
Types of Receivables
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Which of the following is NOT typically classified as a type of receivable on a company's balance sheet?
A
Accounts Payable
B
Interest Receivable
C
Notes Receivable
D
Accounts Receivable
Verified step by step guidance1
Step 1: Understand the concept of receivables. Receivables are amounts owed to a company by its customers or other parties, typically resulting from sales or lending activities. They are classified as assets on the balance sheet.
Step 2: Review the types of receivables listed in the options. Common types of receivables include Accounts Receivable (amounts owed by customers for goods or services), Notes Receivable (formal written promises to pay), and Interest Receivable (interest income earned but not yet received).
Step 3: Analyze the term 'Accounts Payable.' Accounts Payable represents amounts a company owes to suppliers or creditors for goods or services received. It is classified as a liability, not a receivable, on the balance sheet.
Step 4: Compare the classification of Accounts Payable with the other options. Since Accounts Payable is a liability and not an asset, it does not belong to the category of receivables.
Step 5: Conclude that the correct answer is 'Accounts Payable,' as it is not typically classified as a type of receivable on a company's balance sheet.
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Types of Receivables practice set
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