Question

Which of the following statements is false?

1) Receivables include equity securities purchased by the company.
2) Receivables include credit card receivables.
3) Receivables include amounts owed by employees as a result of company loans to employees.
4) Receivables include amounts resulting from transactions with customers.

Answer 1

The false statement is that 'Receivables include equity securities purchased by the company.' Receivables are money owed to the company, whereas equity securities are investments.

Step-by-step explanation:

The statement that is false is: 1) Receivables include equity securities purchased by the company. receivables typically refer to money owed to a company by its customers or clients. For clarity:

• Credit card receivables are considered a form of receivable because they represent money that customers owe the company.
• Amounts owed by employees due to company loans are receivables because they are expected to be repaid to the company.
• Transactions with customers that result in an outstanding payment are also classified as receivables.

Equity securities purchased by a company are not receivables; instead, they are investments and would be categorized as such on the company's balance sheet.