Multiple Choice
Which of the following is considered a cash equivalent?
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7. Receivables and Investments
Types of Receivables
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Other receivables include all of the following except:
A
Accounts receivable
B
Interest receivable
C
Advances to employees
D
Tax refunds receivable
Verified step by step guidance1
Understand the concept of 'Other Receivables': These are amounts owed to a company that do not arise from the primary operations of selling goods or services. Examples include interest receivable, advances to employees, and tax refunds receivable.
Recognize the concept of 'Accounts Receivable': This refers to amounts owed to a company by customers for goods or services provided on credit. It is directly tied to the company's primary operations.
Differentiate between 'Other Receivables' and 'Accounts Receivable': Accounts receivable is not classified as 'Other Receivables' because it is a core component of the company's operations, whereas 'Other Receivables' are non-operational in nature.
Review the examples provided: Interest receivable, advances to employees, and tax refunds receivable are all examples of 'Other Receivables' because they are not directly related to the sale of goods or services.
Conclude that 'Accounts Receivable' is the correct answer to the question, as it does not fall under the category of 'Other Receivables'.
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