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 transactions gives rise to a note receivable?

A company receives a cash advance from a customer for future services.

A company issues common stock to investors.

A company sells inventory on account with payment due in 30 days.

A company lends money to a customer and receives a signed promissory note.

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Verified step by step guidance

Understand the concept of a note receivable: A note receivable is a financial asset that arises when a company lends money or provides credit to another party and receives a signed promissory note as evidence of the debt. The promissory note specifies the terms of repayment, including the principal amount, interest rate, and maturity date.

Analyze the first transaction: Receiving a cash advance from a customer for future services does not create a note receivable. Instead, it results in unearned revenue, which is a liability until the services are performed.

Analyze the second transaction: Issuing common stock to investors is a financing activity and does not involve lending money or receiving a promissory note. This transaction increases equity but does not create a note receivable.

Analyze the third transaction: Selling inventory on account with payment due in 30 days creates an accounts receivable, not a note receivable. Accounts receivable are typically short-term and do not involve a formal promissory note.

Analyze the fourth transaction: Lending money to a customer and receiving a signed promissory note creates a note receivable. This is because the company has provided credit and has formal documentation of the debt, including repayment terms.