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 evaluating different types of receivables, such as loans, which factor is most important to compare to assess their collectibility?

The physical location of the borrower

The creditworthiness of the borrower

The color of the loan documents

The number of employees at the lending institution

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Verified step by step guidance

Understand the concept of receivables: Receivables represent amounts owed to a company by customers or borrowers. Assessing their collectibility is crucial for financial reporting and decision-making.

Identify the key factor for collectibility: The most important factor to evaluate is the creditworthiness of the borrower, as it directly impacts the likelihood of repayment.

Explain creditworthiness: Creditworthiness refers to the borrower’s ability and willingness to repay the loan. It is typically assessed using factors such as credit history, income, debt levels, and financial stability.

Eliminate irrelevant factors: The physical location of the borrower, the color of the loan documents, and the number of employees at the lending institution do not provide meaningful information about the borrower’s ability to repay the loan.

Conclude the importance: Comparing the creditworthiness of borrowers allows lenders to make informed decisions about granting loans and managing receivables effectively.