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 a trade receivable on the balance sheet?

Accounts receivable from customers for goods sold on credit

Interest receivable on loans to suppliers

Dividends receivable from investments

Advances to employees

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Verified step by step guidance

Step 1: Understand the concept of trade receivables. Trade receivables are amounts owed to a business by its customers for goods sold or services provided on credit. These are directly related to the core operations of the business.

Step 2: Analyze the options provided in the problem. The goal is to identify which item represents amounts owed by customers for goods sold on credit, as this is the definition of trade receivables.

Step 3: Evaluate the first option: 'Accounts receivable from customers for goods sold on credit.' This matches the definition of trade receivables because it represents amounts owed by customers for goods sold on credit.

Step 4: Evaluate the other options: 'Interest receivable on loans to suppliers,' 'Dividends receivable from investments,' and 'Advances to employees.' These items are not related to the sale of goods or services to customers and are therefore not classified as trade receivables.

Step 5: Conclude that the correct classification of trade receivables on the balance sheet is 'Accounts receivable from customers for goods sold on credit,' as it aligns with the definition and purpose of trade receivables.