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

Previous problemNext problem

Struggling with Financial Accounting?

Join thousands of students who trust us to help them ace their exams!Watch the first video

Multiple Choice

The effective management of accounts receivable requires financial managers to:

Establish appropriate credit policies and monitor customer payments closely

Increase inventory levels to meet customer demand

Focus solely on maximizing cash sales

Record all receivables as long-term assets

Previous problemNext problem

Verified step by step guidance

Understand the concept of accounts receivable: Accounts receivable represents the money owed to a company by its customers for goods or services delivered on credit. Effective management ensures timely collection and minimizes the risk of bad debts.

Identify the key goal of managing accounts receivable: The primary objective is to maintain a balance between extending credit to customers to boost sales and ensuring timely collection to maintain cash flow.

Evaluate the options provided: Analyze each option to determine its relevance to managing accounts receivable. For example, increasing inventory levels or focusing solely on cash sales does not directly address receivables management.

Focus on the correct approach: Establishing appropriate credit policies (e.g., credit limits, payment terms) and monitoring customer payments closely are essential for effective receivables management. These practices help reduce the risk of non-payment and ensure cash flow stability.

Conclude by eliminating incorrect options: Recording all receivables as long-term assets is incorrect because receivables are typically classified as current assets. Similarly, increasing inventory levels or focusing only on cash sales does not align with managing accounts receivable effectively.