Multiple Choice
Mr. Torres has a small savings account at a local bank. From the perspective of the bank, which type of receivable does this account represent?
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7. Receivables and Investments
Types of Receivables
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Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
Which of the following is an example of a nontrade receivable?
A
Notes receivable from sales of goods
B
Accounts receivable from customers
C
Trade receivables from suppliers
D
Advances to employees
Verified step by step guidance1
Understand the concept of nontrade receivables: Nontrade receivables are amounts owed to a company that are not directly related to the sale of goods or services. These can include loans to employees, tax refunds, or other miscellaneous receivables.
Analyze the options provided: Each option represents a type of receivable. Determine whether each is related to the sale of goods or services (trade receivables) or unrelated (nontrade receivables).
Option 1: Notes receivable from sales of goods - This is a trade receivable because it arises from the sale of goods.
Option 2: Accounts receivable from customers - This is also a trade receivable because it is directly related to the sale of goods or services to customers.
Option 4: Advances to employees - This is a nontrade receivable because it is unrelated to the sale of goods or services and represents an advance given to employees for personal use or work-related expenses.
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Types of Receivables practice set
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