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

Receivables might be sold to which of the following parties?

A supplier

A factor

A customer

A shareholder

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Verified step by step guidance

Understand the concept of receivables: Receivables are amounts owed to a company by its customers for goods or services provided on credit. These are considered assets on the balance sheet.

Learn about the process of selling receivables: Companies may sell their receivables to another party to quickly obtain cash rather than waiting for customers to pay. This is often done to improve cash flow or reduce the risk of non-payment.

Identify the role of a factor: A factor is a financial intermediary that specializes in purchasing receivables from companies at a discount. The factor then collects the receivables directly from the customers.

Eliminate incorrect options: A supplier, customer, or shareholder typically does not purchase receivables. Suppliers provide goods or services, customers owe the receivables, and shareholders invest in the company but do not engage in receivables transactions.

Conclude that the correct party to whom receivables might be sold is a factor, as they are specifically involved in the business of buying receivables.