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 of the following is classified as an account receivable?

Interest receivable from investments

Loans made to employees

Amounts owed by customers for goods sold on credit

Notes receivable from a supplier

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Verified step by step guidance

Understand the concept of accounts receivable: Accounts receivable refers to amounts owed to a company by its customers for goods or services provided on credit. It is recorded as an asset on the balance sheet because it represents money that will be collected in the future.

Analyze each option provided in the problem: Determine whether each item fits the definition of accounts receivable. For example, interest receivable from investments is not related to goods or services sold on credit, so it does not qualify as accounts receivable.

Evaluate loans made to employees: Loans to employees are considered a separate category of receivables, often classified as 'other receivables,' and are not directly tied to the sale of goods or services on credit.

Assess amounts owed by customers for goods sold on credit: This fits the definition of accounts receivable because it represents money owed by customers for goods or services provided on credit.

Review notes receivable from a supplier: Notes receivable are formal written promises to pay a certain amount, often including interest, and are typically classified separately from accounts receivable. They are not directly tied to the sale of goods or services on credit.