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 types of receivables are typically charged directly to the income statement when determined to be uncollectible?

Bad debts expense from accounts receivable

Notes receivable that are still outstanding

Advances to employees

Interest receivable that is accrued but not yet due

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Verified step by step guidance

Understand the concept of uncollectible receivables: Uncollectible receivables refer to amounts owed to a company that are unlikely to be paid by the debtor. These are typically charged to the income statement as an expense.

Identify the type of receivable that is most commonly associated with uncollectible amounts: Bad debts expense from accounts receivable is the most common type of receivable charged directly to the income statement when determined to be uncollectible.

Analyze the other options provided: Notes receivable, advances to employees, and interest receivable are not typically charged directly to the income statement as uncollectible. These may require different accounting treatments depending on the circumstances.

Relate bad debts expense to the matching principle: Bad debts expense is recorded in the same period as the related revenue to comply with the matching principle in accounting, ensuring expenses are matched with the revenues they help generate.

Conclude that bad debts expense from accounts receivable is the correct answer: This type of receivable is directly charged to the income statement when determined to be uncollectible, as it represents a loss to the company.