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

A bank does not reduce the account of the depositor for which of the following?

NSF (non-sufficient funds) checks returned

Payment of a check drawn by the depositor

Collection of a note receivable for the depositor

Service charges assessed by the bank

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Verified step by step guidance

Understand the context: The problem is asking about transactions that do not reduce the depositor's account balance. This requires knowledge of how banks handle different types of transactions in relation to a depositor's account.

Analyze each option: NSF checks returned reduce the depositor's account because the bank reverses the deposit due to insufficient funds. Payment of a check drawn by the depositor reduces the account because the bank deducts the amount of the check from the depositor's balance. Service charges assessed by the bank also reduce the account as fees are deducted directly.

Focus on the correct answer: Collection of a note receivable for the depositor does not reduce the account balance. Instead, it increases the depositor's account balance because the bank collects funds on behalf of the depositor and deposits them into their account.

Relate the concept to financial accounting: In financial accounting, this transaction is recorded as an increase in cash (asset) for the depositor and a decrease in the note receivable (asset) if the depositor had recorded the note receivable previously.

Summarize the reasoning: The correct answer is 'Collection of a note receivable for the depositor' because this transaction represents an inflow of cash into the depositor's account, increasing the balance rather than reducing it.