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

A demand deposit (also known as a checking account) is referred to as such because:

It is used exclusively for business-to-business transactions.

Withdrawals are only allowed after a fixed maturity date.

It earns a fixed interest rate over a specified period.

Funds can be withdrawn by the account holder at any time without advance notice.

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Verified step by step guidance

Understand the concept of a demand deposit: A demand deposit is a type of bank account where funds can be withdrawn at any time without prior notice. It is commonly referred to as a checking account.

Analyze the options provided in the problem: Evaluate each statement to determine whether it aligns with the characteristics of a demand deposit.

Option 1: 'It is used exclusively for business-to-business transactions.' This is incorrect because demand deposits are not limited to business transactions; they are available for personal use as well.

Option 2: 'Withdrawals are only allowed after a fixed maturity date.' This is incorrect because demand deposits allow withdrawals at any time without a fixed maturity date.

Option 3: 'It earns a fixed interest rate over a specified period.' This is incorrect because demand deposits typically do not earn fixed interest rates like savings accounts or time deposits. The correct answer is: 'Funds can be withdrawn by the account holder at any time without advance notice.'