Which of the following is an asset use transaction related to receivables?

• A. Collecting cash from a customer on account
• B. Recognizing interest revenue on a note receivable
• C. Selling goods on credit to a customer
• D. Borrowing cash by signing a note payable

Answer: (A)

Verified step by step guidance

1. Understand the concept of an asset use transaction: An asset use transaction involves the reduction of an asset, typically in exchange for settling a liability or recognizing revenue.
2. Analyze the options provided: Each option represents a different type of transaction related to receivables. Determine which one involves a reduction in an asset.
3. Option 1: Collecting cash from a customer on account. This involves reducing the accounts receivable (an asset) and increasing cash (another asset). This is an asset use transaction because it reduces one asset (accounts receivable).
4. Option 2: Recognizing interest revenue on a note receivable. This does not involve the reduction of an asset but rather the recognition of revenue, which increases equity.
5. Option 3: Selling goods on credit to a customer. This increases accounts receivable (an asset) and does not reduce any asset, so it is not an asset use transaction. Option 4: Borrowing cash by signing a note payable. This increases cash (an asset) and creates a liability, but it does not reduce an asset, so it is not an asset use transaction.