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

An IOU is most similar to which type of receivable?

Advances to employees

Accounts receivable

Interest receivable

Notes receivable

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Verified step by step guidance

Understand the concept of an IOU: An IOU is a written acknowledgment of debt, indicating that one party owes money to another. It is informal and does not typically include detailed terms like interest rates or payment schedules.

Compare the characteristics of an IOU to different types of receivables: Receivables are amounts owed to a company or individual, and they can take various forms such as accounts receivable, interest receivable, advances to employees, or notes receivable.

Analyze 'Advances to employees': These are payments made to employees before they have earned them, typically not related to a formal debt instrument like an IOU.

Analyze 'Accounts receivable': These are amounts owed by customers for goods or services provided on credit. They are typically tied to sales transactions and do not involve a formal written acknowledgment of debt like an IOU.

Analyze 'Notes receivable': These are formal written promises to pay a specific amount of money at a future date, often including interest terms. An IOU is most similar to notes receivable because it represents a written acknowledgment of debt, even if it is less formal.