Which of the following is NOT a source of credit in the context of receivables?

• A. Notes Receivable
• B. Cash Sales
• C. Accounts Receivable
• D. Trade Receivables

Answer: (B)

Verified step by step guidance

1. Understand the concept of 'credit' in the context of receivables. Credit refers to an arrangement where payment is deferred, allowing the buyer to pay at a later date rather than immediately.
2. Analyze each option provided in the question: Notes Receivable, Cash Sales, Accounts Receivable, and Trade Receivables.
3. Notes Receivable: These are formal written promises from customers to pay a specific amount at a future date, which is a source of credit.
4. Accounts Receivable and Trade Receivables: Both represent amounts owed by customers for goods or services provided on credit, making them sources of credit.
5. Cash Sales: These involve immediate payment at the time of the transaction, meaning no credit is extended. Therefore, Cash Sales is NOT a source of credit in the context of receivables.