Multiple Choice
To reduce the time and expense of collecting their accounts receivable, some firms:
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7. Receivables and Investments
Types of Receivables
Multiple Choice
Which of the following is considered an asset of the commercial banking system?
A
Customer deposits
B
Issued bonds
C
Shareholders' equity
D
Accounts receivable
Verified step by step guidance1
Understand the definition of an asset: In financial accounting, an asset is a resource owned or controlled by an entity that is expected to provide future economic benefits.
Analyze the options provided: Customer deposits, issued bonds, shareholders' equity, and accounts receivable. Determine which of these fits the definition of an asset.
Evaluate 'Customer deposits': These are liabilities for the bank because they represent amounts owed to customers, not resources owned by the bank.
Evaluate 'Issued bonds': Bonds issued by the bank are also liabilities because they represent debt obligations the bank must repay to bondholders.
Evaluate 'Accounts receivable': These are amounts owed to the bank by customers or other entities, representing a resource controlled by the bank that will provide future economic benefits, making it an asset.
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