Multiple Choice
Overdrafting your checking account often indicates a sign of:
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7. Receivables and Investments
Types of Receivables
Multiple Choice
It's your responsibility to know about all of the different types of receivables before choosing a bank. Which of the following is NOT considered a type of receivable in financial accounting?
A
Inventory Receivable
B
Accounts Receivable
C
Interest Receivable
D
Notes Receivable
Verified step by step guidance1
Understand the concept of receivables: In financial accounting, receivables are amounts owed to a business by its customers or other parties. They are considered assets because they represent future cash inflows.
Identify the common types of receivables: The main types of receivables include Accounts Receivable (amounts owed by customers for goods or services sold on credit), Notes Receivable (formal written promises to pay a specific amount at a future date), and Interest Receivable (interest income earned but not yet received).
Analyze the given options: Review each option to determine if it fits the definition of a receivable. Accounts Receivable, Interest Receivable, and Notes Receivable are all valid types of receivables in financial accounting.
Evaluate the term 'Inventory Receivable': Inventory is a physical asset representing goods held for sale, not a receivable. There is no such concept as 'Inventory Receivable' in financial accounting.
Conclude the answer: Based on the analysis, 'Inventory Receivable' is NOT considered a type of receivable in financial accounting.
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