Multiple Choice
The Accounts Receivable account is reduced when the seller:
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7. Receivables and Investments
Types of Receivables
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Which of the following types of receivables is best described as an account that provides a means to hold money with a minimal interest rate?
A
Notes Receivable
B
Savings Account Receivable
C
Interest Receivable
D
Accounts Receivable
Verified step by step guidance1
Understand the question: The problem is asking to identify the type of receivable that is best described as an account providing a means to hold money with a minimal interest rate.
Review the options provided: Notes Receivable, Savings Account Receivable, Interest Receivable, and Accounts Receivable.
Clarify the definitions of each term: Notes Receivable refers to a written promise to receive a specific amount of money at a future date. Savings Account Receivable is not a standard financial accounting term but could imply an account related to savings with minimal interest. Interest Receivable represents interest earned but not yet received. Accounts Receivable refers to amounts owed by customers for goods or services provided on credit.
Analyze the description in the question: 'An account that provides a means to hold money with a minimal interest rate' aligns most closely with the concept of a savings account, which typically earns minimal interest.
Conclude that the correct answer is 'Savings Account Receivable,' as it best matches the description provided in the question.
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