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

To reduce the time and expense of collecting their accounts receivable, some firms:

Sell their receivables to a factor at a discount.

Write off all uncollected receivables immediately.

Classify receivables as long-term assets.

Increase the credit period for customers.

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Verified step by step guidance

Understand the problem: The question is asking about a method firms use to reduce the time and expense of collecting accounts receivable. Accounts receivable represent money owed to the company by customers for goods or services provided on credit.

Analyze the options provided: Each option represents a potential strategy for managing accounts receivable. Evaluate each option to determine its effectiveness in reducing time and expense.

Option 1: 'Sell their receivables to a factor at a discount' - This involves selling receivables to a third party (a factor) for immediate cash, minus a fee or discount. This reduces collection time and effort but comes at a cost.

Option 2: 'Write off all uncollected receivables immediately' - Writing off receivables means removing them from the books as bad debt. While this eliminates uncollectible accounts, it does not reduce the time or expense of collection for other receivables.

Option 3: 'Classify receivables as long-term assets' and Option 4: 'Increase the credit period for customers' - These do not address the goal of reducing collection time or expense. Classifying receivables as long-term assets changes their accounting treatment but does not impact collection efforts. Increasing the credit period may actually delay collections further.