1) A receivable occurs when a business sells goods or services to another party on account.

2) Each receivable transaction involves two parties - the one who takes on the obligation and the one who will collect the cash.

3) A receivable is a liability because it represents a right to receive cash in the future.

4) A debtor is a party to a credit transaction who will receive the cash for the transaction at a later date.

5) Which of the following statements regarding receivables is correct?

A) Each receivable transaction involves three parties.

B) Receivables occur when a business loans money to another party.

C) A receivable occurs when a business makes a cash sale of goods or services to another party.

D) A receivable is the right to pay cash in the future from a current receivable transaction.

6) The two major types of receivables are interest receivable and taxes receivable.

7) The three major types of receivables are accounts receivable, notes receivable, and other receivables.

8) The collection period of accounts receivable is usually long, and therefore, it is classified as a long-term asset on the balance sheet.

9) Accounts receivable are usually collected within a short period of time and are therefore reported as a current liability on the balance sheet.

10) Notes receivable represent a written promise that a party will pay a fixed amount of principal plus interest on a stated maturity date.