Multiple Choice
Which type of receivable typically earns interest over time but has a limited number of transfers and withdrawals allowed?
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7. Receivables and Investments
Types of Receivables
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Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
Which of the following best describes obligations to suppliers of goods?
A
Accounts Payable
B
Interest Receivable
C
Accounts Receivable
D
Notes Receivable
Verified step by step guidance1
Understand the concept of obligations to suppliers of goods: These are amounts owed by a company to its suppliers for goods or services purchased on credit.
Review the term 'Accounts Payable': Accounts Payable represents the liability recorded when a company purchases goods or services on credit and has an obligation to pay the supplier in the future.
Compare 'Accounts Payable' with other options: 'Interest Receivable' refers to interest income owed to the company, 'Accounts Receivable' refers to amounts owed to the company by customers, and 'Notes Receivable' refers to written promises for amounts to be received in the future.
Identify the correct term: Since obligations to suppliers of goods are liabilities, the correct term is 'Accounts Payable'.
Conclude the reasoning: Accounts Payable is the best description of obligations to suppliers of goods because it directly represents the liability for unpaid purchases made on credit.
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