Multiple Choice
When a company records the purchase of goods on credit, which account is increased?
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7. Receivables and Investments
Types of Receivables
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Which of the following types of receivables is most directly associated with amounts owed to a company by employees as recorded in a payroll register?
A
Trade accounts receivable
B
Interest receivable
C
Employee advances
D
Notes receivable
Verified step by step guidance1
Understand the context of the problem: The question is asking about a specific type of receivable that relates to amounts owed by employees to the company, as recorded in a payroll register.
Review the definitions of the given options: Trade accounts receivable refers to amounts owed by customers for goods or services sold on credit. Interest receivable refers to interest income earned but not yet received. Notes receivable refers to formal written promises to pay a specific amount at a future date. Employee advances refer to amounts given to employees in advance, which they owe back to the company.
Focus on the key detail: The problem specifies 'amounts owed to a company by employees as recorded in a payroll register.' This indicates that the receivable is related to employees, not customers or external parties.
Match the correct type of receivable: Employee advances are the most directly associated with amounts owed by employees, as they represent funds given to employees in advance, which are recorded as receivables until repaid.
Conclude the reasoning: Based on the definitions and the context provided, the correct answer is Employee advances, as it aligns with the description of amounts owed by employees in the payroll register.
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