Daley Company prepared the following aging of receivables analysis at December 31. Which type of receivable is most likely being analyzed in this aging schedule?

• A. Interest Receivable
• B. Accounts Receivable
• C. Notes Receivable
• D. Advances to Employees

Answer: (B)

Verified step by step guidance

1. Understand the concept of an aging schedule: An aging schedule is a tool used to categorize accounts receivable based on the length of time they have been outstanding. It helps businesses assess the likelihood of collecting these receivables and estimate bad debt expenses.
2. Identify the type of receivable being analyzed: Aging schedules are typically used for Accounts Receivable because they represent amounts owed by customers for goods or services provided on credit. These receivables are subject to collection risk and require monitoring.
3. Eliminate other options: Interest Receivable, Notes Receivable, and Advances to Employees are not typically analyzed using an aging schedule. Interest Receivable represents accrued interest, Notes Receivable are formal written promises to pay, and Advances to Employees are prepayments, none of which require aging analysis.
4. Recognize the purpose of the aging schedule: The aging schedule helps businesses evaluate the collectability of Accounts Receivable and determine the allowance for doubtful accounts, which is a key component of financial reporting.
5. Conclude that the type of receivable being analyzed in the aging schedule is Accounts Receivable, as it aligns with the purpose and methodology of the aging analysis.