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

When a company receives cash from an account receivable, which of the following is the correct accounting entry?

Debit Accounts Receivable; Credit Cash

Debit Cash; Credit Accounts Receivable

Debit Cash; Credit Sales Revenue

Debit Sales Revenue; Credit Cash

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Verified step by step guidance

Understand the nature of the transaction: When a company receives cash from an account receivable, it means the company is collecting money owed by a customer for a previous sale. This transaction affects the Cash account and the Accounts Receivable account.

Identify the accounts involved: The Cash account increases because the company is receiving money, and the Accounts Receivable account decreases because the customer has paid off their debt.

Determine the type of accounts: Cash is an asset account, and Accounts Receivable is also an asset account. An increase in an asset account is recorded as a debit, while a decrease in an asset account is recorded as a credit.

Apply the accounting rule: Debit the Cash account to reflect the increase in cash, and credit the Accounts Receivable account to reflect the decrease in the amount owed by the customer.

Verify the correct entry: The correct accounting entry for this transaction is 'Debit Cash; Credit Accounts Receivable,' as it accurately reflects the changes in the accounts involved.