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, if reported as uncollectible or written off, is most likely to negatively impact a company's credit score?

Interest receivable that is accrued but not yet due

Advances to employees that are repaid on time

Accounts receivable that are written off as bad debts

Notes receivable that are collected in full

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Verified step by step guidance

Step 1: Understand the concept of receivables. Receivables are amounts owed to a company by customers or other parties. Common types include accounts receivable, notes receivable, interest receivable, and advances to employees.

Step 2: Analyze the impact of uncollectible receivables. When receivables are written off as bad debts, it indicates that the company was unable to collect the owed amount, which can signal financial instability or poor credit management.

Step 3: Evaluate the specific types of receivables mentioned in the problem. Accounts receivable represent amounts owed by customers for goods or services provided on credit. Writing off accounts receivable as bad debts directly reflects the company's inability to collect payments from customers, which can negatively impact its credit score.

Step 4: Compare accounts receivable to other types of receivables. Interest receivable is accrued but not yet due, meaning it is not yet expected to be collected. Advances to employees are typically repaid on time and do not affect the company's credit score. Notes receivable are formal agreements and, if collected in full, do not indicate financial instability.

Step 5: Conclude that accounts receivable written off as bad debts are most likely to negatively impact a company's credit score because they directly reflect the company's inability to collect payments from customers, which can be perceived as a risk by creditors and lenders.