Question

3. Which of the following statements is false?

(a) Receivables include equity securities purchased by the company.

(b) Receivables include credit card receivables.

(c) Receivables include amounts owed by employees as a result of company loans to employees.

(d) Receivables include amounts resulting from transactions with customers.

Short answer

Thecorrect option is a.

Step-by-step solution

Definition of Credit Card

The card that allows customers to make purchases without instant cash payment is known as a credit card. The customer has to repay the amount in a future period and the applicable interest and other charges.

Explanation for Correct option

Receivables do not include the equity securities purchased by the company. Such securities must be included in the investment section of the balance sheet. Thus, statement a is false.

Explanation for Incorrect Option

(b) Receivables also records the customer’s credit card amount due. Thus, statement b is true.

(c) Any loan advanced to the employee of the business entity will be reported as receivables on the company’s balance sheet. Thus, statement c is true.

(d) Receivable also includes the amount due from the customer regarding credit sales made. Thus, statement d is true.