Multiple Choice
Which of the following is classified as an account receivable?
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7. Receivables and Investments
Types of Receivables
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Which of the following is NOT considered a type of receivable in financial accounting?
A
Inventory
B
Notes Receivable
C
Interest Receivable
D
Accounts Receivable
Verified step by step guidance1
Step 1: Understand the concept of receivables in financial accounting. Receivables are amounts owed to a company by customers or other parties, typically resulting from sales or lending activities. They are considered assets on the balance sheet.
Step 2: Review the types of receivables listed in the problem. Common types of receivables include Accounts Receivable (amounts owed by customers for goods or services), Notes Receivable (formal written promises to pay), and Interest Receivable (interest earned but not yet received).
Step 3: Analyze the term 'Inventory' in the context of financial accounting. Inventory refers to goods available for sale or raw materials used in production, and it is classified as a current asset, not a receivable.
Step 4: Compare 'Inventory' with the other options provided. Unlike Notes Receivable, Interest Receivable, and Accounts Receivable, Inventory does not represent an amount owed to the company by external parties.
Step 5: Conclude that 'Inventory' is NOT considered a type of receivable in financial accounting, as it does not involve amounts owed to the company.
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