Multiple Choice
Which document is filed to give public notice that a loan has been made on a cooperative apartment?
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7. Receivables and Investments
Types of Receivables
Struggling with Financial Accounting?
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Which of the following is classified as an account receivable?
A
Interest receivable from investments
B
A signed note from a customer promising to pay in 90 days
C
Amounts owed by customers for goods sold on credit
D
Advances to employees for business expenses
Verified step by step guidance1
Step 1: Understand the concept of accounts receivable. Accounts receivable refers to amounts owed to a business by its customers for goods or services provided on credit. It represents a current asset on the balance sheet.
Step 2: Analyze each option provided in the problem. Determine whether each item fits the definition of accounts receivable, which is specifically tied to credit sales of goods or services.
Step 3: Evaluate 'Interest receivable from investments.' This represents interest income earned but not yet received, which is not related to credit sales of goods or services. Therefore, it is not classified as accounts receivable.
Step 4: Evaluate 'A signed note from a customer promising to pay in 90 days.' This is classified as a note receivable, not accounts receivable, because it involves a formal written promise to pay, rather than amounts owed for goods or services sold on credit.
Step 5: Evaluate 'Amounts owed by customers for goods sold on credit.' This fits the definition of accounts receivable because it represents amounts owed by customers for goods or services provided on credit. Advances to employees for business expenses are not accounts receivable, as they are not related to credit sales.
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