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

Under the topic of types of receivables, customers can often provide which of the following as a formal promise to pay a specific amount at a future date?

Notes receivable

Accounts payable

Inventory

Prepaid expenses

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Verified step by step guidance

Understand the concept of receivables: Receivables are amounts owed to a company by its customers or other parties. They represent claims for payment for goods or services provided.

Differentiate between types of receivables: Accounts receivable refers to amounts owed by customers for credit sales, while notes receivable is a formal written promise to pay a specific amount at a future date, often including interest.

Analyze the options provided: Notes receivable is a formal promise to pay, accounts payable represents liabilities owed by the company, inventory refers to goods held for sale, and prepaid expenses are payments made in advance for future benefits.

Identify the correct answer: Based on the definition, customers provide notes receivable as a formal promise to pay a specific amount at a future date.

Conclude the reasoning: Notes receivable is the correct answer because it aligns with the description of a formal promise to pay, distinguishing it from the other options provided.