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 type of receivable is created when a company is named as the beneficiary of a life insurance policy to ensure that a loan will be repaid if the borrower dies?

Insurance Receivable

Accounts Receivable

Notes Receivable

Trade Receivable

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Verified step by step guidance

Understand the concept of receivables: Receivables are amounts owed to a company by others, typically arising from sales, loans, or other transactions. Different types of receivables include accounts receivable, notes receivable, trade receivable, and insurance receivable.

Analyze the scenario: The problem describes a situation where a company is named as the beneficiary of a life insurance policy to ensure repayment of a loan if the borrower dies. This indicates a specific arrangement tied to insurance.

Define 'Insurance Receivable': Insurance receivable refers to amounts expected to be received from an insurance policy, often in cases where the company is named as a beneficiary. This type of receivable is created in situations involving insurance claims or policies.

Compare with other options: Accounts receivable typically arise from credit sales, notes receivable are formal written promises to pay, and trade receivable refers to amounts owed by customers for goods or services. None of these directly relate to life insurance policies.

Conclude the correct type: Based on the scenario and definitions, the receivable created in this case is 'Insurance Receivable,' as it directly involves a life insurance policy ensuring repayment of a loan.