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 of the following is an example of a trade receivable?

Interest receivable from investments

Tax refunds receivable

Accounts receivable from customers for goods sold on credit

Advances to employees

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Verified step by step guidance

Understand the concept of trade receivables: Trade receivables are amounts owed to a business by its customers for goods or services provided on credit. These arise directly from the company's primary operations, such as selling goods or services.

Analyze the options provided: Each option represents a type of receivable, but not all are classified as trade receivables. For example, interest receivable from investments and tax refunds receivable are not related to the company's core operations of selling goods or services.

Focus on the correct option: Accounts receivable from customers for goods sold on credit is directly tied to the company's primary business activities. This is the definition of a trade receivable.

Eliminate incorrect options: Advances to employees are not trade receivables because they are not related to the sale of goods or services. Similarly, interest receivable and tax refunds receivable are classified as other receivables, not trade receivables.

Conclude: The correct example of a trade receivable is 'Accounts receivable from customers for goods sold on credit,' as it aligns with the definition of trade receivables.