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 type of receivable is created when a check that a bank refuses to pay is returned to the company?

A nontrade receivable

A dishonored note receivable

A non-sufficient funds (NSF) check receivable

An accounts payable

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Verified step by step guidance

Understand the concept of receivables: Receivables are amounts owed to a company by customers or other parties. They are typically classified as accounts receivable (from sales transactions) or other types of receivables.

Identify the scenario described in the problem: A check that a bank refuses to pay is returned to the company. This situation occurs when the payer's bank account does not have sufficient funds to cover the check amount.

Learn the term 'non-sufficient funds (NSF) check': An NSF check is a check that cannot be processed due to insufficient funds in the payer's account. When this happens, the company records the amount as a receivable until the payer resolves the issue.

Classify the type of receivable: An NSF check receivable is not related to trade transactions (sales of goods or services). Therefore, it is categorized as a nontrade receivable, which includes amounts owed to the company outside of its primary business operations.

Connect the correct answer to the concept: The correct answer is 'A non-sufficient funds (NSF) check receivable,' as it specifically refers to the receivable created when a check is returned due to insufficient funds.