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 type of receivable or liability best describes a gift card issued by a retailer or restaurant?

Accounts receivable

Interest receivable

Notes receivable

Unearned revenue (liability)

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Understand the concept of unearned revenue: Unearned revenue is a liability that arises when a company receives payment for goods or services it has not yet delivered or performed. It represents an obligation to provide the goods or services in the future.

Analyze the nature of a gift card: When a retailer or restaurant issues a gift card, they receive cash upfront from the customer. However, the company has not yet provided the goods or services associated with the gift card.

Classify the gift card as a liability: Since the company owes the customer the goods or services represented by the gift card, the amount received is recorded as unearned revenue, which is a liability on the balance sheet.

Compare unearned revenue to other options: Accounts receivable, interest receivable, and notes receivable are all assets that represent amounts owed to the company, whereas unearned revenue is a liability because it represents an obligation owed by the company.

Conclude that unearned revenue is the correct classification: Based on the analysis, a gift card issued by a retailer or restaurant is best described as unearned revenue, a liability, because it reflects the company's obligation to deliver goods or services in the future.