Which of the following is classified as a type of receivable on a company's balance sheet?

• A. Accounts Receivable
• B. Accounts Payable
• C. Inventory
• D. Prepaid Expenses

Answer: (A)

Verified step by step guidance

1. Step 1: Understand the concept of receivables. Receivables are amounts owed to a company by customers or other parties, typically resulting from credit sales or other transactions. They are classified as assets on the balance sheet because they represent future economic benefits.
2. Step 2: Analyze the options provided in the question. The options are: Accounts Receivable, Accounts Payable, Inventory, and Prepaid Expenses. Determine which of these represents an amount owed to the company.
3. Step 3: Evaluate each option: - Accounts Receivable: This represents amounts owed to the company by customers for credit sales, making it a type of receivable. - Accounts Payable: This represents amounts the company owes to suppliers, which is a liability, not a receivable. - Inventory: This represents goods held for sale, which is an asset but not a receivable. - Prepaid Expenses: These are payments made in advance for future expenses, which are assets but not receivables.
4. Step 4: Identify the correct classification. Based on the analysis, Accounts Receivable is the only option that qualifies as a type of receivable on the company's balance sheet.
5. Step 5: Conclude that Accounts Receivable is classified as a type of receivable because it represents amounts owed to the company by customers, aligning with the definition of receivables.