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

At what point are other current receivables, such as interest receivable, usually recorded in the accounting records?

At the end of the fiscal year only

When the receivable is written off

When cash is actually received

When the right to receive payment is established

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Verified step by step guidance

Understand the concept of 'other current receivables': These are amounts owed to the company that are expected to be collected within a year, such as interest receivable, rent receivable, or dividends receivable.

Recognize the principle of revenue recognition: In financial accounting, revenue or receivables are recorded when the earning process is complete and the right to receive payment is established, not necessarily when cash is received.

Identify the timing of recording receivables: Other current receivables, such as interest receivable, are recorded in the accounting records at the point when the company has a legal right to receive payment. This is typically when the interest accrues or the earning event occurs.

Distinguish this from other events: Receivables are not recorded at the end of the fiscal year unless the earning event coincides with that timing, nor are they recorded when cash is received or when the receivable is written off.

Apply this understanding to the problem: The correct answer is 'When the right to receive payment is established,' as this aligns with the revenue recognition principle and the accrual basis of accounting.