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 receivable on loans

Notes receivable from related parties

Advances to employees

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 refers to amounts owed to a company by its customers for goods or services provided on credit. It is classified as a current asset on the balance sheet.

Analyze the options provided: Interest receivable on loans, notes receivable from related parties, and advances to employees are not directly related to amounts owed by customers for goods sold on credit. These items are classified differently on the balance sheet.

Focus on the correct classification: The correct answer, 'Amounts owed by customers for goods sold on credit,' directly aligns with the definition of accounts receivable. It represents the company's claim to payment from customers for credit sales.

Differentiate accounts receivable from other receivables: Interest receivable, notes receivable, and advances to employees are considered other types of receivables, but they are not classified as accounts receivable because they do not arise from credit sales to customers.

Conclude the classification: On the balance sheet, accounts receivable is specifically reserved for amounts owed by customers for goods or services sold on credit, distinguishing it from other receivable categories.